UK on recession alert: Tax hike fears mount as GDP FALLS for the second month in a row – heaping pressure on Rachel Reeves

Rachel Reeves fell to red for a second month in a row today, today he received a new blow.

GDP fell by 0.1 percent in May and amazing analysts, which are crowded in a small expansion.

In April, a decrease of 0.3 percent was followed. Economists said that the shrinkage of this quarter of the UK PLC is now ‘race certainty’, but the normal definition of two negative quarters stagnation.

Chancellor, desperately struggling to balance the government’s books, the data ‘disappointment’ admitted.

In the autumn budget, fears were high in public finance, another major tax raid estimated by a hole of 30 billion pounds.

Ones Economic Statistics Director Liz McKEANANAND said: ‘The economy made a little contract with significant decreases in production and construction in May, only partially balanced with the growth in the services.

The economy has not seen any growth since March

Grim, the stack pressure on the chancellor that growth can help balance government books

However, as a whole, the economy still grew up for three months. This reflected the power that emerged until February and March, partly from some activities from some activities.

‘The decline in the production of May, oil and gas extraction, automobile production and often directed by Erratic pharmaceutical industry.

‘While the services grew in May with a strong month for the weak April and the law firms who survived computer programming, they were partially balanced with a very weak month for retail sales.’

Ms. Reeves tried to put a brave face in the terrible figures by listing government policies.

‘It is my number one task to get more money in people’s pockets. Today’s figures are disappointed, I am determined to initiate economic growth and to fulfill this promise, ” he said.

‘The elections in our first year in the government have seen that we expanded the 3 £ bus fee cover, to finance free school meals for more than half a million children, to present free breakfast clubs for every child in the country and to increase the national minimum and national life fee.

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

‘Labour’s expensive U -turns created a tax time bomb in winter fuel and prosperity.

‘We have seen that the march of taxes under labor, inflation is almost twice as much, unemployment increased and growth is stagnant. As more taxes are approaching, things will worse and people working will pay the price. ‘

The tax burden will reach a new summit as a ratio of GDP after the last budget has increased £ 41 billion – the biggest record for a single package.

However, experts suggested that the stopper economy may have a financing gap of £ 31 billion to fill Mrs. Reeves.

Speculation will prefer to expand the long -standing ice cream on the tax thresholds of the chancellor.

The policy, which has been in force since 2022, will end in 2028-29. At this point, as wages increase, it will lead to the tax system of extra 4.2 million people.

The high -rate band will be 3.5 million taxpayers and the highest rate will be 600,000.

However, keeping ice cream for two more years can bring £ 10 billion annually for the Treasury, according to the IFS Thinking Authority – Ms. Reeves can significantly alleviate the problems of the Treasury.

Approximately 400,000 more people would pay income tax and 600,000 higher and additional rates until 2029-30.

Labor MPs are also included for the reserve taxes, despite the Treasury’s warnings from the OBR observer of the OBR observer from a very narrow group of people.

ICAEW Economy Director Suren Thiru said: ‘These contemporary figures are undoubtedly increasing the anxiety of the health of the UK economy, rolling construction and production activity causes a courageous decrease in general production.

‘May’s down shooting means a contraction in GDP in the second quarter, because geopolitical turmoil intensifying in a way that will reduce growth in June despite an increase in hot weather.

‘In the near term, Britain’s growth orbit is likely to prevent by increasing the attention of higher consumer and government expenditures between the fear of more tax growth in this autumn budget.

‘The lack of acceleration in the UK economy, which is mentioned in these stagnant figures, means that despite the recent increase in inflation, the August interest rate is currently inevitable.’

Wealth Club Investment Manager Nicholas Hyett said: ‘Some power in IT and professional service sectors means that the services are engraved in a positive area for a month. However, it was not enough to balance contractions in the production and construction sectors, that is, the UK economy unexpectedly shrunk in May.

Treasury OBR guard emphasized the effect of tax threshold freezing in a report this week

Higher US tariffs, especially in automobile production, seem to cause some troubles of the UK – this is facing the full brunt of the tariffs. Stamp tax changes are also predominantly in the construction sector.

An optimistic, may argue that they are outside the head winds – US tariffs on the UK cars are already softened and will move again when there is time to set the housing market. The problem is that it’s hard to see what’s wrong.

Higher life fees and employer’s national insurance may damage intensive industries such as retail and leisure. Although the markets have reached record levels, macroeconomic painting is uncertain and taxes have been significantly increased in the next budget.