Rachel Reeves Has Been Given More Bad Economic News. Is The UK Heading For Recession?

Britain's Chancellor of the Exchequer Rachel Reeves attends a plenary at the UK-France Summit in Downing Street, London Thursday, July 10, 2025. (Yui Mok/Pool Photo via AP)Rachel Reeves has been dealt another blow after the UK economy unexpectedly shrank in May.Economists had expected gross domestic product (GDP) to bounce bank after it contracted in April.However, the Office for National Statistics has revealed that GDP actually shrunk again, by 0.1%, in May.Reeves said: “Getting more money in people’s pockets is my number one mission. While today’s figures are disappointing, I am determined to kickstart economic growth and deliver on that promise.”But despite the chancellor’s warm words, David Morrison, senior market analyst at financial services provider Trade Nation, warned that even worse could be yet to come. He said: “Yet again, this is another poor piece of UK economic data which can only add to chancellor Rachel Reeves’s woes.“But it will be next month’s quarterly growth lookback, which will be watched closely as investors consider the likelihood of the UK falling back into recession this year.”The official definition of a recession is two consecutive quarters of negative GDP growth.Although the UK economy is still some way off hitting that grim benchmark, the warning lights are already flashing.Shadow chancellor Mel Stride also warned that the latest GDP figures increase the chances of Reeves having to put taxes up again in her Budget in the autumn.He said: “Labour’s costly u-turns, on winter fuel and welfare, have created a ticking tax timebomb.“Under Labour, we have seen taxes hiked, inflation almost double, unemployment rise, and growth stagnate. With more taxes looming, things will only get worse and working people will pay the price.”Lib Dem Treasury spokesperson Daisy Cooper blamed the chancellor’s decision to hike National Insurance contributions for employers for the UK’s sluggish economic performance.She said: “This economic downturn puts storm clouds over the heads of many hardworking business owners and workers who have been rocked by the mistakes of this government.“The chancellor’s jobs tax was completely misguided and the government’s snail’s pace approach to reducing trade barriers with Europe is holding back economic growth.“The chancellor needs to urgently deliver on the economic growth she promised.”Reeves was smiling again as she sat next to Keir Starmer at prime minister’s questions on Wednesday – a far cry from the obvious distress she was in a week before.However, she needs to start delivering on the strong economic growth Labour promised before the election if the mood inside 11 Downing Street is not to take another downward turn of its own.Related...Keir Starmer And Rachel Reeves Could Be Preparing For Their Biggest U-Turn Yet. Here's WhyRachel Reeves Says She Is 'Cracking On With The Job' A Day After Crying In CommonsLindsay Hoyle Had 'Altercation' With Rachel Reeves Before She Cried At PMQs

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