Britain's economy unexpectedly shrank for the second month in a row in May, raising pressure on the Labour government and boosting expectations for an interest rate cut in August.
The UK economy contracted by 0.1% in May following a 0.3% drop in April, according to the Office for National Statistics on 11 July.
The data surprised economists, who had forecast a slight recovery. While the services sector saw minimal growth, a fall in industrial production and construction led to an overall decline in GDP.
After a strong start to 2025, growth momentum has stalled. Analysts now suggest the April-to-June quarter may see little or no expansion.
The Bank of England, which had previously raised its annual growth forecast to 1%, may respond by cutting interest rates next month.
“The weak figures suggest an August rate cut looks increasingly inevitable,” said Suren Thiru of ICAEW, despite recent inflation concerns.
Prime Minister Keir Starmer’s Labour government is under mounting pressure to revive growth.
Finance Minister Rachel Reeves, already facing fiscal strain, may be forced to raise taxes again in the upcoming budget, though she had hoped to avoid this.
"While today's figures are disappointing, I am determined to kickstart economic growth," said Reeves on Friday.
Goods exports to the U.S., Britain’s largest trade partner, dropped sharply in April after surging earlier in the year due to fears over new tariffs. May’s export levels saw only a minor recovery, reverting to figures seen three years ago.
The Bank of England estimates that the UK economy grew by about 0.25% in Q2, but that hinges on stable data for June. If GDP shrinks by 0.4% or more, the quarter could end in contraction.
Despite recent setbacks, some economists see glimmers of hope. KPMG’s Yael Selfin noted that real wage growth and lower borrowing costs may help lift consumer spending later this year.
McDonald's plans to significantly expand its investments in artificial intelligence by 2027, with India expected to play a central role in data govern...
High-ranking delegations from UN member states, business leaders, and representatives of international financial institutions will gather in Turkmenis...
U.S. President Donald Trump has officially cancelled plans to develop new offshore wind projects in federal waters, reinforcing his administration’s...
Uzbekistan has officially approved a new concept aimed at overhauling its system of military professional education, focusing on modernization, integr...
Thailand repatriated two Cambodian soldiers on Friday from a group of 20 detained last week, just days before crucial talks in Malaysia aimed at uphol...
Kyrgyzstan's GDP surged 11.7% year on year in the first half of 2025, driven by gains in services, construction and production, despite a decline in external trade.
Russia's budget deficit reached 3.69 trillion roubles ($46.89 billion), or 1.7% of gross domestic product (GDP), in the first half of the year, the same as expected for the full year, the finance ministry said.
Türkiye supports NATO's new 5% defence spending target and says it has already surpassed the previous 2% benchmark, according to a Turkish defense ministry source.
NATO allies have pledged to raise defence spending to 5% of GDP by 2035, a major increase aimed at countering long-term threats, particularly from Russia and terrorism.
The world’s biggest dance music festival faces an unexpected setback as a fire destroys its main stage, prompting a last-minute response from organisers determined to keep the party alive in Boom, Belgium.
Australian researchers have created a groundbreaking “biological AI” platform that could revolutionise drug discovery by rapidly evolving molecules within mammalian cells.
Australian researchers have pioneered a low-cost and scalable plasma-based method to produce ammonia gas directly from air, offering a green alternative to the traditional fossil fuel-dependent Haber-Bosch process.
A series of earthquakes have struck Guatemala on Tuesday afternoon, leading authorities to advise residents to evacuate from buildings as a precaution against possible aftershocks.
'Superman' continued to dominate the summer box office, pulling in another $57.25 million in its second weekend, as theatres welcome a wave of blockbuster competition following a challenging few years for the film industry.
Thailand repatriated two Cambodian soldiers on Friday from a group of 20 detained last week, just days before crucial talks in Malaysia aimed at upholding a fragile ceasefire along the disputed Thai-Cambodian border.
Russian energy giant Gazprom increased its average daily natural gas supplies to Europe by 37% in July compared to June, when maintenance activities had curbed exports, calculations based on transmission data showed on Friday.
Southeast Asian nations expressed relief on Friday after the United States imposed tariffs on their exports that were significantly lower than anticipated- settling around 19% for the region’s largest economies and helping level the competitive field.
Germany announced on Friday it will send two more Patriot air defence systems to Ukraine, following a deal with the United States that ensures Berlin will be prioritised for receiving the latest replacements.
The freeze on President Donald Trump’s reciprocal tariffs ended on Friday, triggering new duties that Ford says have already cost it $2 billion and prompting warnings from global manufacturers and U.S. allies.
You can download the AnewZ application from Play Store and the App Store.
What is your opinion on this topic?
Leave the first comment