British Economy Shrinks Due to High Taxes and Trade War

• The UK economy contracted by 0.3% in April 2025, marking the largest decline in a year and a half.
• The number of jobs decreased by 109,000 in May, the largest monthly drop since the start of the pandemic.
• Rising taxes and trade disputes with the US negatively impacted investment and economic activity.

This is reported by The Independent, The Guardian.

UK Economy Contraction

The UK economy shrank by 0.3% in April 2025, the largest monthly decline in a year and a half. This contraction was a result of job losses and the cancellation of companies' investment plans due to rising taxes and uncertainty caused by Donald Trump's trade war.

Data from the Office for National Statistics showed that the economy lost momentum after growing by 0.2% in March and 0.5% in February. The decline exceeded economists' forecasts, who expected a contraction of only 0.1%. This raised concerns about the impact of increased national insurance contributions for employers and escalating tariffs on imports from the US on the economic outlook for the UK.

Impact on the Labor Market

Recent job data from HMRC indicates that the number of employees in businesses decreased by 109,000 in May, the largest monthly drop since the onset of the Covid-19 pandemic in 2020. Overall, more than 250,000 jobs have been lost in the UK since the autumn of 2023.

This data was released a day after Chancellor Rachel Reeves presented economic growth plans in a three-year spending review. While she acknowledged that the new data is "clearly disappointing," the Chancellor assured that her spending review would help stimulate growth.

Most Affected Sectors

ONS Director of Economic Statistics Liz McKeown noted that the decline in production in the services and manufacturing sectors negatively affected overall GDP in April. She also added that some economic activity may have been shifted from April to the beginning of the year, which could indicate some positive trends.

"Our main mission is to ensure growth to put more money in people's pockets through our plan for change," Reeves said.

Теги: Економіка