Latest news with #Mel Stride
Yahoo
11-07-2025
- Business
- Yahoo
Rachel Reeves Has Been Given More Bad Economic News. Is The UK Heading For Recssion?
Rachel Reeves has been dealt another blow after the UK economy unexpectedly shrank in May. Economists had expected gross domestic product (GDP) to bounce bank after it contracted in April. However, the Office for National Statistics has revealed that GDP actually shrunk again, by 0.1%, in May. Reeves said: 'Getting more money in people's pockets is my number one mission. While today's figures are disappointing, I am determined to kickstart economic growth and deliver on that promise.' But despite the chancellor's warm words, David Morrison, senior market analyst at financial services provider Trade Nation, warned that even worse could be yet to come. He said: 'Yet again, this is another poor piece of UK economic data which can only add to chancellor Rachel Reeves's woes. 'But it will be next month's quarterly growth lookback, which will be watched closely as investors consider the likelihood of the UK falling back into recession this year.' The official definition of a recession is two consecutive quarters of negative GDP growth. Although the UK economy is still some way off hitting that grim benchmark, the warning lights are already flashing. Shadow chancellor Mel Stride also warned that the latest GDP figures increase the chances of Reeves having to put taxes up again in her Budget in the autumn. He said: 'Labour's costly u-turns, on winter fuel and welfare, have created a ticking tax timebomb. 'Under Labour, we have seen taxes hiked, inflation almost double, unemployment rise, and growth stagnate. With more taxes looming, things will only get worse and working people will pay the price.' Lib Dem Treasury spokesperson Daisy Cooper blamed the chancellor's decision to hike National Insurance contributions for employers for the UK's sluggish economic performance. She said: 'This economic downturn puts storm clouds over the heads of many hardworking business owners and workers who have been rocked by the mistakes of this government. 'The chancellor's jobs tax was completely misguided and the government's snail's pace approach to reducing trade barriers with Europe is holding back economic growth. 'The chancellor needs to urgently deliver on the economic growth she promised.' Reeves was smiling again as she sat next to Keir Starmer at prime minister's questions on Wednesday – a far cry from the obvious distress she was in a week before. However, she needs to start delivering on the strong economic growth Labour promised before the election if the mood inside 11 Downing Street is not to take another downward turn of its own. Keir Starmer And Rachel Reeves Could Be Preparing For Their Biggest U-Turn Yet. Here's Why Rachel Reeves Says She Is 'Cracking On With The Job' A Day After Crying In Commons Lindsay Hoyle Had 'Altercation' With Rachel Reeves Before She Cried At PMQs
Yahoo
11-07-2025
- Business
- Yahoo
'Ticking tax timebomb' warning as UK economy shrinks 0.1% in May in fresh blow to Rachel Reeves
The UK economy contracted unexpectedly for a second month running in May, according to the Office for National Statistics. Gross Domestic Product fell 0.1% in May, following a 0.3% contraction in April. Analysts had forecast a 0.1% rise. The latest economic decline was partly driven by a 'very weak month' for retail sales. The latest figures released on Friday come as a blow to Chancellor Rachel Reeves, who is facing an increasingly difficult task balancing the books ahead of the autumn Budget. 'Thanks to Labour's reckless choices the economy actually shrank in May. This will pile even further pressure for tax rises in the Autumn,' said shadow Chancellor Sir Mel Stride. 'Labour's costly u-turns, on winter fuel and welfare, have created a ticking tax timebomb.' Ms Reeves, who says she has made economic growth her No1 priority despite imposing a 'jobs tax' on companies with a hike in National Insurance contributions for employers, admitted the latest GDP figure was 'disappointing'. She stressed: 'Getting more money in people's pockets is my number one mission. 'While today's figures are disappointing, I am determined to kickstart economic growth and deliver on that promise.' Economists issued fresh warnings of that the Chancellor may be forced to hike taxes at the autumn Budget. Hailey Low, Associate Economist at the National Institute of Economic and Social Research, explained: 'Today's growth figure of -0.1 per cent in May following April's contraction indicates that the UK's economic outlook remains fragile. 'Failure to implement the planned spending cuts has further eroded the UK's fiscal space and it's ability to respond to future shocks. 'Combined with depressed hiring intentions and strained public finances, growth prospects remain muted in the medium term.' She added: 'With fiscal space increasingly constrained, the Chancellor faces hard trade-offs this autumn budget, having to raise taxes or cut spending to meet her self imposed rules.' The May GDP fall comes after activity in the manufacturing sector dropped 1%, following a steep decline in April, having surged earlier in the year as US importers stocked up ahead of US President Donald Trump's tariff rises, which came into effect at the start of April. ONS director of economic statistics Liz McKeown said: 'The economy contracted slightly in May with notable falls in production and construction, only partially offset by growth in services. 'However, across the latest three months as a whole, the economy still grew. 'This reflected strength earlier in the year that resulted, in part, from some activity being brought forward to February and March.' She added: 'While services grew overall in May with a strong month for legal firms, which recovered from a weak April, and computer programming, these were partially offset by a very weak month for retail sales.' Britain's economy had expanded rapidly in the first quarter of 2025, outstripping growth in other G7 countries. In May the Bank of England revised up its full-year growth forecast to 1%.
