UK Economy Shrinks 0.3% Amid Record US Export Drop

The UK economy contracted by 0.3 percent in April 2025, marking its sharpest monthly decline since October 2023, primarily due to a record drop in goods exports to the US following President Donald Trump's introduction of wide-ranging tariffs. The fall in exports, especially in manufacturing and the auto sector, combined with the end of a temporary tax break on house purchases, contributed significantly to the economic slowdown. Despite Britain’s 0.7 percent growth in the first quarter of 2025, the Bank of England has revised down its growth forecast for 2026, warning that tariffs could reduce output by 0.3 percent over three years. The contraction also reflected reduced activity in the services sector and weakened investment plans by businesses responding to rising labor costs and economic uncertainty. Chancellor Rachel Reeves acknowledged the disappointing figures but emphasized the government's commitment to delivering growth through its spending plans. Policymakers face the challenge of balancing stubborn inflation against a sluggish economy, with surveys indicating tepid growth and cautious business sentiment.