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Haulage industry bosses have told MPs that the shortage of lorry drivers and resulting crisis in the supply chain is not improving despite measures introduced by the government to try and alleviate the problems.

Duncan Buchanan, director of policy at the Road Haulage Association, also strongly criticised the recently-announced 5,000 three-month visas for foreign drivers saying “if you were designing a visa system to fail, you would design it something like this”.

He forecasted that the problems being experienced could last a year.

Chef Alberto Gargiulo prepares food for customers at new restaurant Pasta Evangelists
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Hospitality firms were said to be experiencing inflation of 14-18%

His warning came alongside others from recruitment and food services industry bosses appearing before the business, energy and industrial strategy select committee.

All three pointed to structural problems in the labour market which have contributed to the crisis.

The Office for National Statistics published figures on Tuesday which show that HGV driver numbers have fallen by 53,000 over the past four years.

Nearly 50% of importing businesses have experienced changes in transportation costs as a result.

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Mr Buchanan told the select committee that “things are very challenged at the moment”.

“Things are not visibly getting better at this stage, and I know there are a number of measures that have been put in place, stepping up training, stepping tests, but on the ground that isn’t having much of an effect,” he added.

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Labour shortage squeezes food supply chain

The government has introduced a variety of measures to try and alleviate the problem including 5,000 three-month visas for non-UK drivers and training for 4,000 more British workers to become HGV drivers.

Mr Buchanan was particularly critical of the visa proposal saying a year would be more attractive to foreign workers.

“People aren’t sitting around doing nothing, waiting for visas to come up to go to a different country, work for three months, disrupt their lives, get stuck in the UK over Christmas,” he said.

Last week, plans were announced for a change to cabotage rules which govern how many deliveries foreign drivers can make in the UK within one trip.

It will mean they are allowed to make unlimited journeys within two weeks of arriving.

Mr Buchanan said this would have “zero impact” on alleviating the crisis and would serve to undermine the improving wages and conditions of British drivers.

He added however that people should not panic as most of these pressures were being felt by businesses and not being passed on to consumers.

These sentiments were echoed by the head of the Food and Drink Federation.

A lorry driver checks his paperwork after being processed at a customs facility in Ashford, Kent, as Channel traffic builds up following a quiet start to the year and the end of the transition period with the European Union on December 31
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An industry boss said changing cabotage rules would have zero impact on alleviating the crisis

Ian Wright said that while there is no shortage of food there have been problems with getting some products to the shelves.

He also warned that fixing these issues could take time.

“If I said it was going to go on forever, that would be ridiculous, but these issues are structural,” he said, adding that “if it is structural it will go on for quite a long time”.

He also said that he was particularly concerned with inflation and the fact that labour shortages could continue to push prices up.

“In hospitality, inflation is running between 14% and 18%, which is terrifying,” Mr Wright said.

Neil Carberry, chief executive of the Recruitment and Employment Confederation added that labour shortages in the UK are “uniquely sharp” compared with other countries and suggested that “snobbery” in policy-making has contributed.

He suggested that visa policy should be more focused on the workers that are needed, such as in haulage.

Downing Street said the supply chain crisis was discussed in Cabinet on Tuesday morning.

The prime minister reiterated that supply chain pressures are being experienced globally as the world emerges from the pandemic and that the UK is transitioning to a high wage, high productivity economy.

A government spokesperson said: “We have already taken immediate action to increase the supply of HGV drivers, streamline the testing process and improve working conditions.

“We will continue to work with the sector to alleviate the challenges facing the industry.”

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UK economy figures not as bad as they look despite GDP fall, analysts say

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UK economy figures not as bad as they look despite GDP fall, analysts say

The UK economy unexpectedly shrank in May, even after the worst of Donald Trump’s tariffs were paused, official figures showed.

A standard measure of economic growth, gross domestic product (GDP), contracted 0.1% in May, according to the Office for National Statistics (ONS).

Rather than a fall being anticipated, growth of 0.1% was forecast by economists polled by Reuters as big falls in production and construction were seen.

It followed a 0.3% contraction in April, when Mr Trump announced his country-specific tariffs and sparked a global trade war.

A 90-day pause on these import taxes, which has been extended, allowed more normality to resume.

This was borne out by other figures released by the ONS on Friday.

Exports to the United States rose £300m but “remained relatively low” following a “substantial decrease” in April, the data said.

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Overall, there was a “large rise in goods imports and a fall in goods exports”.

A ‘disappointing’ but mixed picture

It’s “disappointing” news, Chancellor Rachel Reeves said. She and the government as a whole have repeatedly said growing the economy was their number one priority.

“I am determined to kickstart economic growth and deliver on that promise”, she added.

But the picture was not all bad.

Growth recorded in March was revised upwards, further indicating that companies invested to prepare for tariffs. Rather than GDP of 0.2%, the ONS said on Friday the figure was actually 0.4%.

It showed businesses moved forward activity to be ready for the extra taxes. Businesses were hit with higher employer national insurance contributions in April.

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The expansion in March means the economy still grew when the three months are looked at together.

While an interest rate cut in August had already been expected, investors upped their bets of a 0.25 percentage point fall in the Bank of England’s base interest rate.

Such a cut would bring down the rate to 4% and make borrowing cheaper.

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Is Britain going bankrupt?

Analysts from economic research firm Pantheon Macro said the data was not as bad as it looked.

“The size of the manufacturing drop looks erratic to us and should partly unwind… There are signs that GDP growth can rebound in June”, said Pantheon’s chief UK economist, Rob Wood.

Why did the economy shrink?

The drops in manufacturing came mostly due to slowed car-making, less oil and gas extraction and the pharmaceutical industry.

The fall was not larger because the services industry – the largest part of the economy – expanded, with law firms and computer programmers having a good month.

It made up for a “very weak” month for retailers, the ONS said.

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UK economy remains fragile – and there are risks and traps lurking around the corner

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UK economy remains fragile - and there are risks and traps lurking around the corner

Monthly Gross Domestic Product (GDP) figures are volatile and, on their own, don’t tell us much.

However, the picture emerging a year since the election of the Labour government is not hugely comforting.

This is a government that promised to turbocharge economic growth, the key to improving livelihoods and the public finances. Instead, the economy is mainly flatlining.

Output shrank in May by 0.1%. That followed a 0.3% drop in April.

Ministers were celebrating a few months ago as data showed the economy grew by 0.7% in the first quarter.

Hangover from artificial growth

However, the subsequent data has shown us that much of that growth was artificial, with businesses racing to get orders out of the door to beat the possible introduction of tariffs. Property transactions were also brought forward to beat stamp duty changes.

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In April, we experienced the hangover as orders and industrial output dropped. Services also struggled as demand for legal and conveyancing services dropped after the stamp duty changes.

Many of those distortions have now been smoothed out, but the manufacturing sector still struggled in May.

Signs of recovery

Manufacturing output fell by 1% in May, but more up-to-date data suggests the sector is recovering.

“We expect both cars and pharma output to improve as the UK-US trade deal comes into force and the volatility unwinds,” economists at Pantheon Macroeconomics said.

Meanwhile, the services sector eked out growth of 0.1%.

A 2.7% month-to-month fall in retail sales suppressed growth in the sector, but that should improve with hot weather likely to boost demand at restaurants and pubs.

Struggles ahead

It is unlikely, however, to massively shift the dial for the economy, the kind of shift the Labour government has promised and needs in order to give it some breathing room against its fiscal rules.

The economy remains fragile, and there are risks and traps lurking around the corner.

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Is Britain going bankrupt?

Concerns that the chancellor, Rachel Reeves, is considering tax hikes could weigh on consumer confidence, at a time when businesses are already scaling back hiring because of national insurance tax hikes.

Inflation is also expected to climb in the second half of the year, further weighing on consumers and businesses.

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Government to announce new scheme as it ramps up AI adoption with backing from Facebook owner Meta

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Government to announce new scheme as it ramps up AI adoption with backing from Facebook owner Meta

The government is speeding up its adoption of AI to try and encourage economic growth – with backing from Facebook parent Meta.

It will today announce a $1m (£740,000) scheme to hire up to 10 AI “experts” to help with the adoption of the technology.

Sir Keir Starmer has spoken repeatedly about wanting to use the developing technology as part of his “plan for change” to improve the UK – with claims it could produce tens of billions in savings and efficiencies.

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The government is hoping the new hires could help with problems like translating classified documents en masse, speeding up planning applications or help with emergency responses when power or internet outages occur.

The funding for the roles is coming from Meta, through the Alan Turing Institute. Adverts will go live next week, with the new fellowships expected to start at the beginning of 2026.

Technology Secretary Peter Kyle said: “This fellowship is the best of AI in action – open, practical, and built for public good. It’s about delivery, not just ideas – creating real tools that help government work better for people.”

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He added: “The fellowship will help scale that kind of impact across government, and develop sovereign capabilities where the UK must lead, like national security and critical infrastructure.”

The projects will all be based on open source models, meaning there will be a minimal cost for the government when it comes to licensing.

Meta describes its own AI model, Llama, as open source, although there are questions around whether it truly qualifies for that title due to parts of its code base not being published.

The owner of Facebook has also sponsored several studies into the benefits of government adopting more open source AI tools.

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Minister reveals how AI could improve public services

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Mr Kyle’s Department for Science and Technology has been working on its mission to increase the uptake of AI within government, including through the artificial intelligence “incubator”, under which these fellowships will fall.

The secretary of state has pointed to the success of Caddy – a tool that helps call centre workers search for answers in official documents faster – and its expanding use across government as an example of an AI success story.

He said the tool, developed with Citizens Advice, shows how AI can “boost productivity, improve decision-making, and support frontline staff”. A trial suggested it could cut waiting times for calls in half.

My Kyle also recently announced a deal with Google to provide tech support to government and assist with modernisation of data.

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Joel Kaplan, the chief global affairs officer from Meta, said: “Open-source AI models are helping researchers and developers make major scientific and medical breakthroughs, and they have the potential to transform the delivery of public services too.

“This partnership with ATI will help the government access some of the brightest minds and the technology they need to solve big challenges – and to do it openly and in the public interest.”

Jean Innes, the head of the Alan Turing Institute, said: “These fellowships will offer an innovative way to match AI experts with the real world challenges our public services are facing.”

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