UK Economy Contracts Amid Job Losses and Tariff​ concerns

Updated June 12, 2025

The UK economy experienced a 0.3% contraction⁤ in⁤ April,according to the Office for National‌ Statistics. This downturn follows growth of 0.2% in March and 0.5% in February. Businesses are reportedly cutting‍ jobs and halting investment due to increased taxes and uncertainty stemming from escalating US import tariffs, impacting economic growth.

Economists had anticipated a smaller 0.1% contraction. The latest figures highlight worries ⁢that rising employer national‌ insurance contributions and⁢ the global impact of US tariffs are harming the UK’s ‌ economic growth prospects.

Recent data⁢ from HMRC indicates a⁤ significant drop in employment. The number of workers on company payrolls decreased ‍by 109,000 in May, marking the largest monthly decline since the initial COVID-19 lockdown in 2020.​ Since Rachel Reeves’s autumn budget, Britain has seen over 250,000‍ job ‍losses.

The ​timing‌ of this data ⁣is particularly challenging.⁣ It arrives just a day after the chancellor presented plans to boost the‍ economy ⁣through a three-year spending review, perhaps undermining the government’s ⁤efforts to demonstrate economic improvement.

What’s next

Further economic data and ⁣policy responses will be closely watched to ‍determine the trajectory of the UK economy in the coming months.