Blow For Rachel Reeves As UK Economy Shrank By 0.3% After Trump Tariffs

Rachel Reeves unveiled her spending review yesterday.The UK economy shrank by 0.3% during April after Donald Trump imposed sweeping tariffs on foreign imports, official numbers show.It’s a blow to Rachel Reeves, who tried to splash the cash for government departments in her spending review yesterday.The Office for National Statistics (ONS) found the economy declined by more than was expected – economists had predicted a 0.1% contraction.It pointed to a 0.4% fall in services output across April – having recorded a 0.4% growth in the sector the previous month – and was the largest contributor to the decline in gross domestic product (GDP) in the month.Production output fell by 0.6% too, but construction output did increase by 0.9%.The decline follows Trump’s so-called liberation day, where the US imposed 10% tariffs on all UK goods going into the States. The government’s planned tax hikes – including an increase to employers’ national insurance contributions – also came in during the same month.The update is particularly embarrassing for Labour who have promised to put economic growth at the heart of their government.But the ONS’s director of economic statistics said that the wider picture was still positive.Liz McKeown said: “The economy contracted in April, with services and manufacturing both falling. However, over the last three months as a whole GDP still grew, with signs that some activity may have been brought forward from April to earlier in the year.“Both legal and real estate firms fared badly in April, following a sharp increase in house sales in March when buyers rushed to complete purchases ahead of changes to stamp duty. Car manufacturing also performed poorly after growing in the first quarter of the year.“In contrast April was a strong month for construction, research and development and retail, with increases in these only partially offsetting falls elsewhere.”Responding to the figures, Reeves said: “Our number mission is delivering growth, and putting more money into people’s pockets through our plan for change.“While these numbers are clearly disappointing, I’m determined to deliver on that mission.”Reeves gave large sums to the NHS, the defence department, and transport, as well as housing and schools in her spending review while also pledging to end the use of hotels for asylum seekers by 2029.However, the shadow chancellor Mel Stride hit out at the government over the stats.He said: “Before the election Labour promised ‘growth, growth, growth’ but today’s fall in GDP lays bare the disappointing consequences of Rachel Reeves’ economic vandalism.“Yesterday, the chancellor should have taken corrective action to fix the problems she has caused. But instead her spending review has all but confirmed what many feared: more taxes are coming.“Under Labour, we have seen taxes hiked, inflation almost double, unemployment rise, and growth fall. With more taxes coming, things will only get worse and hardworking people will pay the price.”Meanwhile, Liberal Democrat treasury spokesperson Daisy Cooper said: “At the spending review yesterday the chancellor suggested that the country was on the up but today this claim has not survived contact with reality.“Today’s figures should be a wake up call for the government which has so far refused to listen to the small businesses struggling to cope with the jobs tax, worried that our high streets will be completely hollowed out and that our hospitality sector is hanging by a thread.”Related...Donald Trump's Tariffs Blamed As Experts Make Grim Forecast About UK EconomyKeir Starmer Warns Nigel Farage's 'Mad Experiment' Would Ruin Economy Like Liz TrussTrump’s Actual Economy Is Tanking 100 Days In, So He Is Fantasising A Great One

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