Britain’s economic output fell more sharply than expected in April, as the impact of new US tariffs and the expiration of a property tax break weighed heavily on performance, official figures revealed on Thursday.
Gross domestic product (GDP) contracted by 0.3% from March, marking the largest monthly decline since October 2023. The fall surpassed economists’ expectations of a 0.1% dip, following modest growth of 0.2% in March.
“After increasing for each of the four preceding months, April saw the largest monthly fall on record in goods exports to the United States with decreases seen across most types of goods, following the recent introduction of tariffs,” said Liz McKeown, director of economic statistics at the Office for National Statistics (ONS).
A significant contributor to the April downturn was a slowdown in real estate and legal activity, which followed the end of a temporary tax incentive on house purchases. This accounted for 0.2 percentage points of the overall 0.3% contraction, the ONS said. Car manufacturers also reported reduced output and weaker exports to both the US and the EU.
British exports to the United States alone fell by £2.0 billion ($2.7 billion) in April, marking the steepest monthly drop since records began in 1997.
In response to the data, sterling fell by a quarter of a cent against the US dollar.
Despite the setback in April, the UK economy had expanded by 0.7% in the first quarter of 2025, outperforming all other Group of Seven (G7) advanced economies. That growth prompted the Bank of England to raise its full-year forecast to 1% last month.
However, business sentiment remains muted. Surveys have shown that companies are scaling back on hiring and investment plans, citing the significant rise in labour costs introduced by finance minister Rachel Reeves in October.
Faridah Abdulkadiri
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