UK economy shrinks unexpectedly by 0.1% in blow to Rachel Reeves | Economic growth (GDP)

The UK’s economy unexpectedly shrinked in May, fueled by a blow to Chancellor Rachel Reeves with a sharp decreases in production and construction.

The National Statistics Office said that the gross domestic product fell by 0.1% in May and a monthly expansion of a monthly expansion city estimates.

Donald Trump’s higher taxes and uncertainty created by the tariff war and interrupted things and canceled their investment plans in April after a decrease of 0.3% in a row was the second contraction.

The latest figures show that decreases in construction, oil and gas extraction, automobile production and pharmaceutical production have returned to growth in the dominant service sector of the UK.

Production production in the first three months of the year, businesses have exceeded the introduction of Trump’s “Liberation Day” tariff announcement, led to an increase in exports. Although a slowdown was likely to slow down after US importers filled their stocks, producers were affected by uncertainty.

Suren Thiru, the Economic Director of the Institute of Financial Advisors in England and Wales, said, “These screaming figures are undoubtedly increasing the anxiety of the economy of the UK economy, rolling construction and production activity causes a courageous decrease in general production.”

The latest figures are Labour’s growth plans, Keir Starmer’s high -betting welfare this month because the autumn budget is under the microscope among the speculation needed for major tax increases.

The ministers warned the government about “financial results önce after making changes to the benefits of disability, which will be worth 5 billion pounds in savings for the Treasury. This contributes to £ 1.25 billion that the Treasury must find to cover May’s climbing winter fuel payments.

Mel Stide, Shadow Chancellor, said Labour’s return to the economy of Labour’s return to the economy. “Thanks to Labour’s reckless elections, the economy really shrunk in May. This will put more pressure on tax increases in autumn.”

Reeves said the latest figures were disappointed and that the government was much more to support growth. “To get more money in people’s pockets is the number one task. Today’s figures are frustrated, I am determined to start economic growth and to fulfill this promise.”

However, analysts and business leaders warned that tax increases may focus on growth by overcoming households and occupational confidence.

CBI Chief Economist Ben Jones said: “With the increasing financial difficulties and the autumn budget on the horizon, Chancellor should provide a clear assurance – there are no new taxes for the job and instead of working to eliminate the obstacles to growth.”

The UK economy grew rapidly in the first quarter of 2025 and expanded other countries in the G7 Developed Economics Club by 0.7%. However, the event is expected to be suppressed in the rest of the year. The Budget Responsibility Independent Office predicted the GDP growth as a whole for 2025, but it will reconsider this projection to the autumn budget.

While making an agreement with the United States to reduce Donald Trump’s most upright tariffs, British Bank Governor Andrew Bailey, as well as establishing closer ties with the EU, warned that the uncertainty of trade policy is still clouded.

Economists expect the bank to increase the concerns about the power of the economy despite permanent inflationary pressures and expects to reduce interest rates at its current 4.25% at its next meeting in August.