After seeing better growth than expected in the first quarter of 2025, the UK economy has shrunk.
According to new figures from the Office for National Statistics (ONS), GDP (gross domestic product), a key measure of economy growth, is estimated to have fallen by 0.3% in April, following growth of 0.2% in March.
It reflects, across key sectors, services output dipping by 0.4%, production output falling by 0.6%, and construction output conversely growing by 0.9%.
Alpesh Paleja, deputy chief economist, CBI, said: “After bumper growth at the start of the year, the economy has started off the second quarter on a disappointing note. Weaker momentum is more in line with the picture painted by our own business surveys.
“The sunniest April on record clearly boosted retail sales, but this wasn’t enough to offset drags on activity elsewhere, including some payback from sectors that saw strong growth in March. In addition, the onset of the US’ “Liberation Day” tariffs; the ensuing volatility in financial markets; and the ramp up in uncertainty may have taken the edge off activity for some businesses.
“The latest data means that, at best, we’re heading for near-stagnation over the second quarter. While we expect some pick-up in growth momentum further ahead, an environment of high uncertainty and cost pressures is still proving a significant headwind to activity.
“Looking ahead, while we expect some growth momentum to be sustained, an environment of high uncertainty and cost pressures is proving a significant headwind to activity. Yesterday’s Spending Review rightly chose to prioritise investment in clean energy and R&D, as well as delivering a much-needed boost to housing, transport, and infrastructure.
“But businesses are labouring under the cumulative burden of rises in NICs and the National Living Wage. With the Autumn Budget now coming sharply into focus, the Chancellor should prioritise squashing tax rumours and speculation that risks stymieing confidence and hitting investment plans further.”
