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US Tariffs and Tax Hikes Push UK Economy Into April Contraction

April’s downturn follows strong Q1 growth, prompting a spending review to support recovery before the Bank of England decides on interest rates.

FELIXSTOWE, ENGLAND - APRIL 07: In this aerial view Containers sit on the tarmac at Felixstowe Port on April 07, 2025 in Felixstowe, England. In an op-ed over the weekend, British PM Keir Starmer wrote that his government would use industrial policy to mitigate the impact of the Trump Administration's tariffs, which include a baseline 10% levy on most all goods imported to the US and 25% on automobiles. (Photo by Dan Kitwood/Getty Images)
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Cargo is loaded onto the container ship MH Perseus, following its arrival from New Orleans, U.S., at the Port of Southampton, Southampton, Britain, April 3, 2025. REUTERS/Toby Melville/File Photo

Overview

  • Official data show GDP fell 0.3% in April, more than triple the 0.1% decline economists had forecast.
  • Exports to the US plunged by a record £2 billion following President Trump’s new tariffs, dragging overall output lower.
  • Both services output and manufacturing contracted in April, while construction expanded by 0.9%.
  • Chancellor Rachel Reeves called the figures “clearly disappointing” and is banking on her spending review to reignite growth.
  • Slowing wage growth and rising unemployment are damping domestic demand as the Bank of England evaluates its next rate decision.