Logo

UK Economy Contracts Sharply in April Amid US Trade Tariffs Impact

In April 2025, the UK economy contracted by 0.3%, more than expected, driven by a significant £2 billion fall in exports to the US amid new tariffs. Manufacturing, especially the automotive sector, also declined. While the UK showed strong growth earlier in the year, the Bank of England warns that ongoing trade tensions and inflation pose risks to future growth. The government is focused on economic recovery despite current challenges.

UK Economy Contracts Sharply in April Amid US Trade Tariffs Impact

UK Economy Contracts by 0.3% in April, Surpassing Expectations

The UK’s economy shrank by 0.3% in April, marking its steepest monthly decline since October 2023. This downturn exceeded economists’ forecasts, which had anticipated a milder contraction of 0.1%. Rising taxes combined with a sharp fall in exports to the United States have taken a toll, prompting businesses to cut back on investments and reduce jobs.

Sharp Decline in UK Exports to the US Amid Trade Tensions

A key contributor to the economic setback has been the introduction of tariffs by the US, significantly impacting British exports. UK goods exports to America dropped by a staggering £2 billion ($2.7 billion) in April — the largest monthly fall on record since data collection began in 1997.

Liz McKeown, director of economic statistics, highlighted that after steady growth over the previous four months, April witnessed the most dramatic monthly decline in exports across most goods categories, closely linked to the newly imposed US tariffs.

Manufacturing and Auto Industries Bear the Brunt

Manufacturing output also shrank by 0.6%, largely driven by a decline in the automotive sector. The UK car industry felt the weight of a 25% US tariff on auto imports, further hindering production.

Mixed Signals as UK Growth Outperforms Yet Faces Challenges

Despite the April contraction, the UK economy recorded a solid 0.7% expansion in the first quarter of 2025, ranking ahead of other G7 nations. This performance encouraged the Bank of England to revise its 2025 growth forecast upwards to 1%.

However, the central bank has tempered optimism by lowering the 2026 growth outlook to 1.25%, warning that continued tariffs could erode output by 0.3% over the next three years. This delicate balance places Bank of England policymakers in a difficult spot as they weigh stubborn inflationary pressures against a sluggish economy ahead of upcoming interest rate decisions.

Government Focuses on Economic Revival

Prime Minister Keir Starmer’s administration has prioritized rejuvenating the economy to boost living standards nationwide. While April’s numbers were disappointing, the Office for National Statistics confirms that the economy has still expanded overall across the last three months, suggesting resilience amid headwinds.

Looking Ahead

The UK faces a challenging economic landscape, navigating between external trade challenges and internal inflation pressures. How policymakers respond in the coming months will be crucial for setting the course toward sustained growth and stability.

Japan and US Engage in Detailed Talks Amid Tariff Deadline
Japan and US Engage in Detailed Talks Amid Tariff Deadline

Japan's tariff negotiator Ryosei Akazawa and US Commerce Secretary Howard Lutnick conducted extensive phone talks amid rising pressure to address a looming 24% reciprocal tariff. The tariff pause expires soon, prompting continued coordination to safeguard bilateral trade relations.

Canada Drops Digital Services Tax to Restart US Trade Talks
Canada Drops Digital Services Tax to Restart US Trade Talks

Facing a suspension of trade talks by the U.S. over its digital services tax on major American tech companies, Canada has announced it will rescind the 3% levy retroactive to 2022. The tax, scheduled to take effect June 30, prompted threats of tariffs and a breakdown in talks. Canadian officials now aim to resume negotiations with the U.S. by July 21, focusing on securing a broader trade and security deal. While seen as a tactical retreat, this move could pave the way for resolving ongoing trade disputes including steel, aluminum, and automotive tariffs, crucial given the strong economic ties between the two nations.

OECD Slashes US and Global Growth Forecasts Amid Tariff Uncertainty
OECD Slashes US and Global Growth Forecasts Amid Tariff Uncertainty

The OECD has significantly downgraded its economic growth forecasts for the US and global markets, citing tariff-related trade tensions and policy uncertainties. US growth is now expected at 1.6% in 2025, down from 2.2%, with global GDP growth slowing to 2.9%. Inflation in the US is also projected to rise, possibly nearing 4% by late 2025, reflecting the impact of increased trade costs and ongoing economic challenges.

South Korea Cuts Interest Rates Amid Sluggish Economy and Trade Tensions
South Korea Cuts Interest Rates Amid Sluggish Economy and Trade Tensions

South Korea's central bank reduced its key interest rate to 2.5% and slashed the 2025 growth forecast to 0.8% to counter economic headwinds. Ongoing US tariff policies and political unrest following former President Yoon’s ousting have weakened domestic demand and trade prospects. Despite market gains, challenges remain as the country navigates global trade disputes and internal political shifts.

US-China Trade Pact Secures Rare Earths Amid Tariff Hike to 55%
US-China Trade Pact Secures Rare Earths Amid Tariff Hike to 55%

The US announced a new trade agreement with China securing essential rare earth minerals critical for industries like automotive and defense. The deal raises tariffs to 55% on Chinese imports while easing educational access for Chinese students in the US. Final approval from both nations' leaders is still awaited.

Indonesian Economist Critiques US Protectionism Amid Global Trade Shifts
Indonesian Economist Critiques US Protectionism Amid Global Trade Shifts

Indonesian economist Dr. Hendri Saparini criticised the US for adopting protectionist trade policies under Trump while urging other countries to liberalize markets. She noted the limited impact of US tariffs on Indonesia’s economy, highlighted opportunities for India-Indonesia cooperation, and discussed Indonesia’s strategic partnerships with both the US and China amid evolving global economic and security challenges. Dr. Saparini called for stronger regional collaboration, balanced trade policies, and addressing domestic economic challenges such as unemployment and industrial competitiveness.

US-India Trade Deal Expected Soon with Favorable Terms for India
US-India Trade Deal Expected Soon with Favorable Terms for India

US Commerce Secretary Howard Lutnick announced that a US-India trade deal could be concluded in the near future following productive negotiations. India is set to receive favorable terms as an early agreement participant. The multi-sectoral deal aims to more than double trade volume from USD 191 billion to USD 500 billion by 2030. Both countries are committed to granting preferential market access, with discussions ongoing for tariff exemptions and finalizing the pact by late 2025.

Trump and China's Xi Expected to Discuss Trade Issues This Week
Trump and China's Xi Expected to Discuss Trade Issues This Week

President Donald Trump and Chinese leader Xi Jinping are anticipated to speak this week to address key trade issues, including tariffs and export restrictions. Following a temporary tariff truce agreed in Geneva last month, these talks could help resolve ongoing tensions linked to U.S. concerns about China’s economic model. Meanwhile, legal challenges are ongoing regarding the authority to impose tariffs, with court rulings currently under appeal.

Bank of England Holds Rates at 4.25%, Eyes Possible Cut This Summer
Bank of England Holds Rates at 4.25%, Eyes Possible Cut This Summer

At its latest meeting, the Bank of England decided to hold rates steady at 4.25%, with a split vote showing some preference for cuts. Inflation remains above target at 3.4%, while global uncertainties, including Middle East conflicts and US tariff policies, weigh on the outlook. Economists expect a possible 25-basis-point cut in August, but the BOE emphasizes a data-driven, flexible approach amid evolving risks.

Trump Accuses China of Violating Trade Deal Amid Civil Unrest Claims
Trump Accuses China of Violating Trade Deal Amid Civil Unrest Claims

Donald Trump criticized China for breaching a temporary trade agreement meant to alleviate economic instability and civil unrest caused by steep US tariffs. Despite initial stabilization after the deal, Trump asserts China failed to comply. US officials also expressed concern over stalled trade negotiations, highlighting ongoing challenges in bilateral trade relations following tariff hikes that severely impacted China's manufacturing and export sectors.

World Bank Slashes Global Growth Forecast to 2.3% Amid Trade Tensions
World Bank Slashes Global Growth Forecast to 2.3% Amid Trade Tensions

The World Bank has cut the 2025 global economic growth forecast to 2.3%, citing escalating trade tensions and rising barriers impacting global trade and supply chains. India is projected as the fastest-growing major economy at 6.3%, while developed economies like the US and EU face downward revisions. Low-income countries are expected to endure prolonged recovery periods.

UK Firms Face Rising Costs and Job Cuts Amid Economic Slowdown in July
UK Firms Face Rising Costs and Job Cuts Amid Economic Slowdown in July

In July, the UK saw a slowdown in private sector growth as rising costs, new fiscal measures, and trade tensions weighed heavily on businesses. Employment dipped to a five-month low as firms grappled with national insurance hikes and inflation pressures. The Bank of England faces a tough decision, balancing inflation exceeding 3.6% against a fragile jobs market. Manufacturing remains weak, while services slow, leaving policymakers navigating economic uncertainties with significant stakes for global markets.

US Trade Deals at Crossroads Ahead of July 9 Tariff Deadline
US Trade Deals at Crossroads Ahead of July 9 Tariff Deadline

President Trump's ambitious trade deal promise faces tests as the July 9 tariff deadline approaches. Despite agreements with the UK and Vietnam, key partners like India, Japan, the EU, and South Korea remain entangled in negotiations. Each country grapples with sector-specific challenges—from agriculture to technology—while global markets watch closely. The outcome will shape US trade dynamics and international relations in the months ahead.

Britain’s £72 Billion Hidden Gem: How RELX Shapes the UK Economy
Britain’s £72 Billion Hidden Gem: How RELX Shapes the UK Economy

In the shifting landscape of the UK economy, RELX shines as an under-recognized but colossal success story. Valued at £72 billion, this London-based firm excels in data-driven analytics across risk management, scientific research, legal services, and exhibitions. Its pioneering use of AI and digital transformation challenges traditional publishing norms and underscores the future of Britain’s innovative economy.

Trump and Xi Hold Key Phone Call Amid Ongoing Trade Tensions
Trump and Xi Hold Key Phone Call Amid Ongoing Trade Tensions

In a significant development, Chinese President Xi Jinping and U.S. President Donald Trump held a phone call amid ongoing trade tensions characterized by extensive tariffs and disputes over critical minerals. This conversation follows a recently agreed 90-day tariff truce aimed at de-escalating the trade war. The dialogue highlights efforts to manage fragile relations and potentially advance negotiations between the two economic superpowers.

Next Week's Inflation Data to Reflect Impact of Higher Tariffs
Next Week's Inflation Data to Reflect Impact of Higher Tariffs

Next week's inflation reports are expected to indicate the growing effect of tariffs on consumer and producer prices, potentially signaling increased goods inflation. Market optimism remains amid elevated valuations and trade tensions, with key economic events such as the CPI release and Apple's developer conference poised to influence investor sentiment.

ADNOC Joins Race for BP Assets Amidst Industry Takeover Buzz
ADNOC Joins Race for BP Assets Amidst Industry Takeover Buzz

UAE’s ADNOC has joined other major energy players in expressing interest in acquiring parts of BP’s prized assets, particularly its LNG holdings. BP’s recent underperformance and ongoing strategic reset—boosting oil and gas investment while trimming renewables—have heightened takeover speculation. With longstanding ties between ADNOC and BP, and other suitors like Shell and ExxonMobil also circling, the energy sector braces for potentially significant portfolio shifts in the coming months.

Man in 60s Arrested in 1993 Murder Case of Annie McCarrick
Man in 60s Arrested in 1993 Murder Case of Annie McCarrick

Gardaí have arrested a man in his 60s on suspicion of murdering Annie McCarrick, who vanished in Dublin in March 1993. The investigation includes a search of a Clondalkin residence, while authorities urge anyone with information to come forward. Ms. McCarrick had recently settled in Ireland and was last seen on March 26, 1993, before disappearing without a trace.