The United Kingdom’s economy experienced a significant contraction in April, primarily due to new global trade tariffs and domestic tax hikes. Data from the Office for National Statistics revealed a 0.3% decrease in GDP compared to March’s 0.2% growth, a sharper decline than the anticipated 0.1% fall.

A major factor in this economic downturn was President Donald Trump’s announcement of global trade tariffs, which created uncertainty among businesses and negatively impacted U.K. exports. Despite having a relatively balanced trading relationship with the U.S., the U.K. was subjected to a 10% reciprocal tariff. In contrast, EU exports to the U.S. faced a flat 20% levy. The introduction of these tariffs led to the largest recorded monthly drop in goods exports to the United States, as observed by the ONS.

Domestically, increased national insurance contributions and the end of a temporary property tax break contributed to reduced economic activity. Specifically, the Stamp Duty Land Tax changes resulted in a 63.5% decrease in residential property transactions from the previous month. This combination of factors has made April a challenging economic period.

U.K. Chancellor Rachel Reeves expressed disappointment with the growth figures, which conflicted with her economic revitalization goals. She highlighted the ongoing uncertainty around tariffs as a critical issue impacting exports and production.

The first quarter of 2025 saw a notable 0.7% growth, possibly due to preemptive economic activity preceding the tariffs. However, economists predict more subdued growth for the remainder of the year, with the Bank of England forecasting only a 1% increase in 2025. The weaker jobs market and economic uncertainty are expected to result in growth rates of around 0.1-0.2% in the second quarter.