UK economy remains fragile – and there are risks and traps lurking around the corner | Money News


Monthly Gross Domestic Product (GDP) figures are volatile and, on their own, don’t tell us much.

However, the picture emerging a year since the election of the Labour government is not hugely comforting.

This is a government that promised to turbocharge economic growth, the key to improving livelihoods and the public finances. Instead, the economy is mainly flatlining.

Output shrank in May by 0.1%. That followed a 0.3% drop in April.

Ministers were celebrating a few months ago as data showed the economy grew by 0.7% in the first quarter.

Hangover from artificial growth

However, the subsequent data has shown us that much of that growth was artificial, with businesses racing to get orders out of the door to beat the possible introduction of tariffs. Property transactions were also brought forward to beat stamp duty changes.

Read more:
Trump to hit Canada with 35% tariff
Woman and three teens arrested over cyber attacks

In April, we experienced the hangover as orders and industrial output dropped. Services also struggled as demand for legal and conveyancing services dropped after the stamp duty changes.

Many of those distortions have now been smoothed out, but the manufacturing sector still struggled in May.

Signs of recovery

Manufacturing output fell by 1% in May, but more up-to-date data suggests the sector is recovering.

“We expect both cars and pharma output to improve as the UK-US trade deal comes into force and the volatility unwinds,” economists at Pantheon Macroeconomics said.

Meanwhile, the services sector eked out growth of 0.1%.

A 2.7% month-to-month fall in retail sales suppressed growth in the sector, but that should improve with hot weather likely to boost demand at restaurants and pubs.

Struggles ahead

It is unlikely, however, to massively shift the dial for the economy, the kind of shift the Labour government has promised and needs in order to give it some breathing room against its fiscal rules.

The economy remains fragile, and there are risks and traps lurking around the corner.

Please use Chrome browser for a more accessible video player

Is Britain going bankrupt?

Concerns that the chancellor, Rachel Reeves, is considering tax hikes could weigh on consumer confidence, at a time when businesses are already scaling back hiring because of national insurance tax hikes.

Inflation is also expected to climb in the second half of the year, further weighing on consumers and businesses.



  • Related Posts

    Texas State Rep. James Talarico Went On Fox News And Destroyed Their Propaganda
    • August 12, 2025

    To get every single word of every story delivered to your inbox, subscribe to PoliticusUSA. Texas state Rep. James Talarico is regarded as a rising star who might end up…

    Continue reading
    Gunman kills three at Target store in US state of Texas | Gun Violence News
    • August 11, 2025

    Victims not immediately identified after deadly attack at popular store in the state capital, Austin. A gunman has opened fire in the parking lot of a Target store in Texas,…

    Continue reading

    Random News

    Texas State Rep. James Talarico Went On Fox News And Destroyed Their Propaganda

    • By gonews
    • August 12, 2025
    • 1 views
    Texas State Rep. James Talarico Went On Fox News And Destroyed Their Propaganda

    StubHub is once again working on its IPO that could raise $1B

    • By gonews
    • August 12, 2025
    • 1 views
    StubHub is once again working on its IPO that could raise $1B

    When are the 2026 NASCAR Schedules Released? What do we know?

    • By gonews
    • August 12, 2025
    • 3 views
    When are the 2026 NASCAR Schedules Released? What do we know?

    مؤسسة هند تشكو قتلة أنس الشريف للجنائية الدولية

    • By gonews
    • August 12, 2025
    • 1 views
    مؤسسة هند تشكو قتلة أنس الشريف للجنائية الدولية