UK GDP fell by 0.3% in April—its sharpest monthly decline in 18 months—as business taxes rose, household bills surged and exports to the US plummeted amid new tariffs.

April’s contraction reflects multiple economic headwinds, including tighter fiscal pressures on firms from higher employer NICs and increased business rates, as well as cost-push inflation from elevated utility and council tax bills. External demand weakened sharply due to US-imposed tariffs, triggering a record drop in exports. The services and manufacturing sectors both declined, with legal and property markets correcting after an unusually strong March. While monthly GDP figures are volatile, the Spending Review’s emphasis on capital investment and productivity-enhancing public services may support more sustainable growth in the medium term.

UK economy shrank in April as tax rises and US tariffs kicked in - BBC News

1. What were the main contributors to the UK’s negative GDP growth in April 2025?

2. Analyse how Trump’s tariff policy contributed to the decline in UK exports and recent growth rates.

3. Evaluate how the Spending Review might support long-term economic growth despite recent short-term contraction.