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UK GDP Falls, Raising Doubts Over Spending Plans
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UK GDP Falls, Raising Doubts Over Spending Plans

UK GDP falls as its economy has its first negative growth in six months, contradicting prior projections. The latest estimates pile new pressure on the plans of Prime Minister Keir Starmer, in particular as his government seeks to pay for massive public spending announcements.

UK GDP Falls, Raising Doubts Over Spending Plans
By Oskar Malec | Last Updated: 12 Jun 2025

Economists Taken by Surprise By Decline in GDP
GDP fell as much as 0.3% in April, a marked downturn on positive growth seen in February and March. That was worse than expected; economists had predicted a smaller 0.1% drop. The fall was largely due to contractions in both services and manufacturing, although there was some growth in construction activity.

This plunge bodes poorly for the second quarter. Gloomy economic forecasts as rising unemployment, taxes and external pressure from the likes of Donald Trump in the form of tariffs, are also contributing to the economic uncertainty. Growth for the quarter is now forecast to be just 0.1%, putting it to the test as a set-piece for Starmer’s stewardship.

Government Plans and Public Finances in Flux
The lackluster data adds further pressure to Keir Starmer’s government, which was relying on strong early 2025 growth to back up a string of public-service investments. Spending plans have been included in the economic statement, which are linked to economic performance of the nation, said Chancellor of the Exchequer Rachel Reeves.

But analysts and the Bank of England predict a significant slowdown that could squeeze the country’s national budget. A fall in revenue could prompt the government to discuss raising taxes, making its fiscal plan more complicated.

With slower growth on the horizon, the politics of Starmer’s economic agenda has just become a good deal more uncertain.

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