Fri, 11 Jul 2025

Fri, 11 Jul 2025 Reeves disappointed after economy unexpectedly shrinks

The economy contracted in May for the second month in a row, adding to pressure on the chancellor.

* The UK economy shrunk by 0.1% in May, confounding analysts who had expected slight growth.
* Manufacturing was a key driver of the decline, with oil and gas extraction, car-making, and the pharmaceutical industry all weaker.
* Retail sales were also "very weak".
* Chancellor Rachel Reeves described the performance as "disappointing" but vowed to kickstart economic growth.
* The government's plans for economic growth have been put under pressure by the latest figures.
* Analysts expect a rate cut in August, which could help stimulate growth.
* Business confidence and manufacturing suggest stronger growth is expected in June.
* Forecasters are warning of a fragile outlook for growth due to US trade war tensions and changes to stamp duty.
* The Chancellor faces "hard trade-offs" in her Budget in the autumn, with options including raising taxes or cutting spending.
  >>