UK economy shrunk in April as tax rises and US tariffs kicked in

The UK economy shrunk by more than expected in April as taxes rose for firms, household bills increased and exports to the US plunged.

The economy contracted by 0.3%, more than the 0.1% fall predicted by economists.

In April, employers’ National Insurance and water, energy and council tax bills both rose, while the introduction of tariffs by US President Trump led to the largest monthly fall on record in US exports.

The figures come after a day after chancellor Rachel Reeves set out spending plans aimed at boosting growth, with funding increases for the NHS and defence, but budgets squeezed elsewhere.

The UK government has made growing the economy its main priority in an effort to boost living standards.

Despite the economy contracting in April, the Office for National Statistics said it had grown overall in the last three months.

Chancellor Rachel Reeves said while the latest figures were “clearly disappointing” she was “determined to deliver” growth.