Blow to UK economy as GDP growth FALLS by 0.1% in ‘challenge’ to Rachel Reeves’s fiscal plans

Over March to May 2025, GDP jumped by 0.5 per cent over the quarter, which is slightly above the 0.4 per cent previously forecast.

Despite this, May posted a 0.1 posted monthly decline, which is against the expected 0.1 per cent increase.

Rachel Reeves has been dealt another blow to the GDP growth

GETTY / ONS

Professor Joe Nellis, an economic adviser at accountancy firm MHA, said: “This is a far cry from the strong growth in the first quarter of the year when a surge in exports and a robust performance in the services sector placed the UK among the G7’s top performers.

“Growth over the first half of the year is now expected to be modest. Despite a more positive outlook for the remainder of the year, this presents a challenge to the Chancellor — her fiscal headroom remains limited by high levels of public borrowing and debt and her spending plans are heavily reliant on kickstarting the economy.

“Just as last year, we now wait tentatively for the Autumn Budget to find out how the Chancellor aims to solve her fiscal problems.”

Over the period, monthly services output rose by 0.1 per cent in, following a fall of 0.3% in April 2025. This was revised up from a 0.4 per cent fall in the ONS previous publication.

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How has GDP growth changed in recent years?

ONS

Production output fell by 0.9 per cent in May 2025, following an unrevised fall of 0.6 per cent in April 2025, but grew by 0.2 per cent in the three months to May 2025

Construction output slipped by 0.6 per cent in May 2025, following growth of 0.8 per cent in April 2025. This was revised down from 0.9 per cent growth in our previous publication, but grew by 1.2 per cent in the three months to May 2025.

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