The UK economy experienced a sharp contraction in April 2025, marking the largest monthly decline since October 2023, according to official data released by the Office for National Statistics. This downturn comes amid global market disruptions caused by US President Donald Trump’s announcement of widespread tariff measures, which triggered an immediate economic shock.
The data revealed that the UK’s GDP fell by 0.3% in April compared to March, surpassing analysts’ expectations of a modest 0.1% drop. Liz MacKeown, Director of Economic Statistics at the Office for National Statistics, noted that April saw the largest-ever monthly decline in goods exports to the US, following the imposition of new tariffs.
The expiration of temporary tax relief on property purchases also contributed to a decline in real estate and legal services activities, accounting for 0.2 percentage points of the total 0.3% contraction. Additionally, car manufacturers reported reduced production and exports to both the US and the European Union.
Despite this setback, the UK economy grew by 0.7% in the first quarter of 2025, outpacing other G7 economies. However, the Bank of England has lowered its growth forecast for 2026 to 1.25%, citing potential long-term impacts of US tariffs. Policymakers are under pressure due to persistent inflation and sluggish economic growth, with expectations of maintaining interest rates steady in the coming weeks. Recent surveys suggest a return to modest growth, though consumer spending declined in May, reflecting ongoing market caution.
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