Rachel Reeves in crisis as UK economy grows by | U.Ok.Finance News
UK GDP figures have confirmed sluggish growth of simply 0.3% in the second quarter from April to June, dealing a blow to Chancellor Rachel Reeves as she tries to ship on her financial guarantees. Ms Reeves has pledged to sort out Britain’s long-standing productiveness drawback in the autumn finances.Investment in infrastructure and reform of the planning system will kind the spine of her plans to spice up the economy’s productive capability. However, the latest Office of National Statistics (ONS) knowledge might be bitterly disappointing in contrast with the primary quarter, which noticed growth of 0.7%. Commenting afterward, she mentioned: “Today’s economic figures are positive with a strong start to the year and continued growth in the second quarter.”But there’s more to do to ship an economy that works for working people. “I know that the British economy has the key ingredients for success but has felt stuck for too long.”She added: “That is why we’re investing to rebuild our national infrastructure, cutting back on red tape to get Britain building again and boosting the national minimum wage to make work pay.”There’s more to do and at present’s figures solely fuel my ambition to ship on our plan for change.”Growth in June was also stronger than expected, bouncing back after two consecutive months of decline.The month was boosted by a “robust” efficiency for scientific analysis and development, engineering and car gross sales.Within the manufacturing sector, there was a robust growth in the manufacturing of electronics.June’s 0.4% studying comes after the economy contracted by 0.1% in each April and May.The ONS confirmed that April’s financial decline was weaker than anticipated after receiving more knowledge, having initially estimated a drop of 0.3% for the month.Sir Mel Stride MP, Shadow Chancellor of the Exchequer, mentioned: “Any economic growth is welcome, but with business leaders saying that all indicators are flashing red, and key economists are warning that Rachel Reeves has created a £50 billion black hole in the public finances, Rachel Reeves’ economic vandalism is clear.“Under Labour, we have already seen taxes hiked, inflation almost double, unemployment rise, and growth stagnate. Looming tax rises will only make things worse and working people will pay the price.”ONS director of economic statistics Liz McKeown said: “Growth slowed in the second quarter after a strong start to the year.”The economy was weak across April and May, with some activity having been brought forward to February and March ahead of stamp duty and tariff changes, but then recovered strongly in June.”Across the second quarter as a whole, growth was led by services, with computer programming, health and vehicle leasing growing.”One area which did see significant growth was the construction industry, which saw a 1.2% spike.The Government’s Planning and Infrastructure Bill, now in the House of Lords, aims to cut red tape and shift power from councillors to expert officers.Writing in The Guardian on Wednesday, Ms Reeves wrote: “If renewal is our mission and productivity is our challenge, then investment and reform are our tools.”Labour’s second 12 months in workplace will deal with “building a stronger economy for a renewed Britain”, she emphasised.She added: “Working people across Britain are striving and grafting, but they haven’t had the tools they need for the job. They have not seen their incomes rise as a reward for their hard work.“There is that sinking feeling that families and businesses across the country feel at the end of every month — that they are working hard, but getting nowhere.”There is nothing progressive — nothing Labour — about an economy that is not productive and does not reward those who contribute.” She added: “Since I became shadow chancellor and then Chancellor, I have known that breaking this cycle will require our sustained effort across many fronts.”Ms Reeves mentioned her tax selections might be set out “responsibly” in the finances regardless of hypothesis about her plans.In April, GDP fell 0.3%, the sharpest month-to-month drop since October 2023, after US tariffs imposed by President Donald Trump triggered a document droop in UK exports to America. Productivity was 0.2% decrease in the primary quarter of 2025 than a 12 months earlier, the Office for National Statistics mentioned.In July, ministers have been informed to prioritise “productivity-enhancing opportunities” in authorities contracts, with Ms Reeves and Cabinet Office chief Pat McFadden saying public procurement should enhance “British industry, jobs, skills, productivity.”
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