UK economy shrinks unexpectedly by 0.1% in blow to Rachel Reeves
Guardian17 hrs
UK Economy Shrinks Second Month as Tax Hikes, Tariffs Weigh
Above: A general view of the Bank of England on July 8, 2025, in London, England. Image copyright: Mike Kemp/In Pictures/Getty Images
The Spin
Government-critical narrative
Labour's reckless tax hikes and policy U-turns have created a ticking tax timebomb that's strangling economic growth. The Chancellor's jobs tax on employers and minimum wage increases are forcing businesses to cut jobs while her costly reversals on welfare and winter fuel cuts have blown a massive hole in public finances. Reeves is wholly out of her depth as Chancellor.
Pro-government narrative
The economic weakness reflects temporary disruptions from Trump's trade war and one-off factors like stamp duty changes, not fundamental problems with Labour's growth strategy. The U.K. still outperformed other G7 countries in the first quarter with 0.7% growth, and the government's investment in infrastructure and the National Health Service will deliver long-term benefits.