BRITAIN’S austerity economy lurched shakily yesterday amid gloom from cuts-obsessed Tories and fresh warnings of the growing disconnect between headline “growth” and tumbling living standards.

Officially the economy grew sluggishly by 0.7 per cent between July and September — a marked slowdown on a paltry 0.9 per cent between April and June.

Even usually smug millionaire Chancellor George Osborne could not ignore the impact of cuts policies after the 2008 banking crisis which have sparked a sharp decline in fortunes across Europe.

Britain “is not immune,” conceded Mr Osborne.

Yesterday’s figures came days after a big rise in government borrowing reflecting union warnings that Tory policies of public-sector cuts and forced low-wage labour in return for benefits have failed.

Despite mounting evidence of the failure of austerity policies, Mr Osborne vowed to keep on cutting, declaring pig-headedly: “We need to carry on.”

But trade union Unite general secretary Len McCluskey said it was clear a new approach was needed.

“We are seeing a lopsided recovery with low wages hitting tax receipts as incomes tumble at a rate not seen since when Queen Victoria was on the throne,” he said.

“We need growth based on decent jobs that pay a decent wage and investment, not cuts, to deliver a sustainable recovery.”

TUC general secretary Frances O’Grady said the growth figures were part of a “tale of two economies. A few people at the top are thriving but most workers’ wages are still in decline,” she said.

“Businesses can’t keep prospering if their customers have less money to spend.”

newsed@peoples-press.com