Britain's Economic Slowdown: The Ripple Effect of U.S. Tariffs and Tax Changes
Britain's economy saw a sharp slowdown in April, largely due to U.S. tariff implications from President Trump's policies and the conclusion of a property tax break. GDP shrank by 0.3%, surpassing expectations, as service sector contractions and declining exports impacted economic performance. Government spending reviews aim to address these challenges.
In a significant downturn, Britain's economy contracted sharply in April, driven by new U.S. tariffs introduced by President Trump and the cessation of a tax break on property transactions. Official data revealed an unexpected GDP decline of 0.3%, marking the largest monthly fall since October 2023.
Finance Minister Rachel Reeves described the GDP figures as 'clearly disappointing,' amidst a backdrop of a multi-year spending review outlining more than 2 trillion pounds for public expenditure among government departments. The sluggish growth follows a post-pandemic pattern, intensified by a 0.4% drop in the services sector and reduced car exports.
Sterling suffered, and gilt yields hit a one-month low, exacerbated by a 2 billion-pound drop in U.S. exports. Economists highlighted persistent trade tensions and internal fiscal policies as ongoing challenges, anticipating subdued growth after the strong start to 2025. Interest rates remain a focal point, with potential cuts anticipated later this year despite inflation concerns.
(With inputs from agencies.)
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