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.
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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.
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Uzbekistan’s economic performance has remained strong, with robust growth, narrowing consolidated fiscal and current account deficits, and ample international reserves, stated the International Monetary Fund following to the 2025 Article IV Consultation with the Republic of Uzbekistan.
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.
A deadly mass shooting early on Monday (7 July) in Philadelphia's Grays Ferry neighbourhood left three men dead and nine others wounded, including teenagers, as more than 100 shots were fired.
Dozens of international and domestic flights were cancelled or delayed after Mount Lewotobi Laki Laki erupted on Monday, but Bali’s main airport remains operational.
The 17th Summit of the Economic Cooperation Organization (ECO) was successfully held in Khankendi, Azerbaijan, highlighting the region’s revival and the deepening economic cooperation among member states.
French member of parliament Olivier Marleix was found dead at his home on Monday, with suicide being considered a possible cause.
The U.S. is set to support Lebanon’s military readiness with a $100 million deal to sustain A-29 Super Tucano aircraft, enhancing the Lebanese Armed Forces’ ability to uphold the recent ceasefire in southern Lebanon.
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