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You can find the current article at its original source at https://www.theguardian.com/business/2025/jun/12/uk-economy-shrinks-firms-hit-by-higher-taxes-and-trump-trade-war
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| UK economy shrinks by 0.3% as as exports hit by Trump trade war | |
| (31 minutes later) | |
| Worse than forecast April GDP data shows challenge facing Rachel Reeves to kickstart growth to fund spending review | Worse than forecast April GDP data shows challenge facing Rachel Reeves to kickstart growth to fund spending review |
| Business live – latest updates | Business live – latest updates |
| The UK economy contracted in April by 0.3% as businesses cut jobs and cancelled investment plans in response to the uncertainty created by Donald Trump’s tariff war and higher taxes. | |
| Figures from the Office for National Statistics showed the economy went into reverse after growing by 0.2% in March and 0.5% in February. | Figures from the Office for National Statistics showed the economy went into reverse after growing by 0.2% in March and 0.5% in February. |
| The reading, which was the worst monthly drop since October 2023, overshot City economists’ expectations of a 0.1% contraction. | |
| The services sector suffered after a change to stamp duty rates in England and Northern Ireland that led to a sharp drop in house sales. The hit to estate agents, conveyancing lawyers and other property industry businesses helped push down the services sector by 0.4%. | |
| Liz McKeown, an ONS director of economic statistics, also pointed to the hit from Donald Trump’s “liberation day” tariffs announced at the start of the month: “After increasing for each of the four preceding months, April saw the largest monthly fall on record in goods exports to the United States with decreases seen across most types of goods, following the recent introduction of tariffs.” | |
| Manufacturing dropped by 0.6% after the car industry cut production, most likely in response to the US 25% levy on auto imports. The construction industry was the only bright spot, rising by 0.9% after an increase in housebuilding starts. | |
| McKeown said there were signs that the higher levels of activity in February and March had been down to companies bringing forward sales to beat US import tariffs. | |
| The figures also underscored concerns that an increase in employer national insurance contributions would harm the UK’s growth prospects. | |
| The latest jobs data from HMRC showed the number of workers on company payrolls fell by 109,000 in May – the largest monthly fall since the same period in 2020 during the first Covid lockdown. | The latest jobs data from HMRC showed the number of workers on company payrolls fell by 109,000 in May – the largest monthly fall since the same period in 2020 during the first Covid lockdown. |
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| More than 250,000 jobs have been lost in Britain since Rachel Reeves’s autumn budget. The GDP data is a blow for the chancellor, coming only a day after she laid out plans to grow the economy in a three-year spending review, and will disappoint ministers keen to show they have improved the UK’s outlook. |