UK Economy: Unexpected Contraction & Reeves Impact
- The UK economy shrank more than expected in April,prompting economists to temper their growth forecasts.
- Paul Dales of Capital Economics noted that the economy's growth will likely be hampered by weak international demand.
- Dales anticipates GDP growth of just 1% for the year.This figure mirrors last year's performance and falls slightly below consensus estimates for UK economic growth.
UK Economy Contracts in April,growth Forecasts Cut
Updated June 12,2025
The UK economy shrank more than expected in April,prompting economists to temper their growth forecasts. New data indicates that the momentum seen earlier in the year has waned.
Paul Dales of Capital Economics noted that the economy’s growth will likely be hampered by weak international demand. He also cited domestic businesses reducing expenditures to offset increased costs stemming from April’s tax hikes.
Dales anticipates GDP growth of just 1% for the year.This figure mirrors last year’s performance and falls slightly below consensus estimates for UK economic growth.
“The economy will be held back by subdued overseas demand and domestic businesses cutting back on spending to compensate for the rise in costs driven by April’s increase in taxes.
what’s next
The latest figures suggest a challenging path ahead for the UK economy, with modest growth predicted amid ongoing pressures from both domestic and international factors. The Office for National Statistics will continue monitoring economic indicators.