The UK economy contracted by 0.3% in April, its worst performance in over a year and a half, according to new figures released today. The economic contraction was partly due to the increase in taxes for businesses and household bills, which saw exports to the US plummet.
Chancellor Rachel Reeves has refused to rule out future tax rises, citing economists’ warnings that failure to boost growth would lead to more tax hikes later this year. She acknowledged the latest figures were “clearly disappointing” but emphasized that no chancellor can achieve a balanced budget in their first year of office amidst global uncertainty.
Reeves prioritized spending billions on long-term projects during Wednesday’s Spending Review, aiming to boost economic growth and improve living standards. However, many of these projects are expected to take years to materialize, with current-day-to-day budgets being squeezed.
Council tax is also likely to rise to pay for local services. Opposition parties have criticized Reeves’ previous decision to raise employers’ National Insurance contributions, which they claim has dragged on growth.
Economists warn that the UK’s sluggish growth has been a long-standing issue, and the latest contraction may be a sign of more challenges ahead. Despite this, the Chancellor remains committed to her spending plans, aiming to create jobs and stimulate growth in the coming years.
Source: https://www.bbc.com/news/articles/cy5e6ly9qq3o