What's happened
The UK economy contracted by 0.3% in April, marking the largest decline since October 2023. This downturn follows a period of growth and is attributed to rising taxes, job losses, and the impact of Donald Trump's tariffs on exports, particularly to the US.
What's behind the headline?
Economic Impact
- The 0.3% contraction is the worst monthly drop since October 2023, exceeding economists' expectations of a 0.1% decline.
- The services sector fell by 0.4%, largely due to a drop in housing market activity following changes to stamp duty.
Export Challenges
- Exports to the US fell by £2 billion, the largest monthly decline since records began in 1997, driven by tariffs on machinery and transport, including cars.
- The overall goods exports to the EU also saw a significant drop of 12.6%.
Future Outlook
- Economists predict that the contraction may continue into May as the effects of the tariff-induced rush to export unwind.
- Chancellor Rachel Reeves faces pressure to stimulate growth amid rising unemployment and tax burdens, with potential tax increases looming if economic conditions do not improve.
What the papers say
According to Phillip Inman in The Guardian, the contraction was driven by businesses cutting jobs and investment plans due to higher taxes and tariff uncertainties. He notes that the services sector was particularly hard hit by changes in stamp duty, leading to a sharp decline in house sales. Meanwhile, Holly Williams from The Independent highlights the record drop in exports to the US, emphasizing that the tariffs introduced by Trump have had a profound impact on UK trade. Williams also points out that the construction sector was a rare bright spot, growing by 0.9% despite the overall economic downturn. This contrast in perspectives illustrates the multifaceted nature of the economic challenges facing the UK.
How we got here
The contraction in April follows a surprising growth of 0.7% in the first quarter of 2025, driven by exporters rushing to beat impending tariffs. The introduction of these tariffs on April 2, alongside increased national insurance contributions, has created significant economic strain.
Go deeper
- What are the implications of the tariff changes?
- How might the government respond to this economic downturn?
- What sectors are most affected by the recent economic changes?
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More on these topics
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The Office for National Statistics is the executive office of the UK Statistics Authority, a non-ministerial department which reports directly to the UK Parliament.
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Rachel Jane Reeves is a British Labour Party politician serving as Shadow Chancellor of the Duchy of Lancaster and Shadow Minister for the Cabinet Office since 2020. She has been the Member of Parliament for Leeds West since 2010.
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Donald John Trump is an American politician, media personality, and businessman who served as the 45th president of the United States from 2017 to 2021.
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The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom or Britain, is a sovereign country located off the northwestern coast of the European mainland.