UK economy shrinks sharply in April amid global trade turmoil

The UK economy unexpectedly contracted in April, as fresh global trade tensions and a sharp fall in services output dragged down monthly growth, according to new data released today by the Office for National Statistics (ONS).

Real gross domestic product (GDP) fell by 0.3% in April 2025, reversing a modest 0.2% rise in March and marking the sharpest monthly decline since October 2023. The drop was significantly worse than the 0.1% fall forecast by economists in a Reuters poll.

The monthly contraction was primarily driven by a 0.4% drop in services output, the largest contributor to UK GDP, which had grown by 0.4% the month before. Output in the production sector also declined by 0.6%, following a 0.7% fall in March, while the construction sector provided a rare bright spot, growing by 0.9%.

The downturn coincided with rising international instability, as markets reacted to US President Donald Trump’s announcement of sweeping new tariffs, which triggered economic uncertainty and disrupted global trade flows.

Despite April’s weak performance, the broader economic picture remains more positive. Real GDP grew by 0.7% in the three months to April 2025 compared to the previous three-month period, reflecting strength earlier in the year. All three main sectors contributed to the quarterly increase, with services rising 0.6%, production 1.1%, and construction 0.5%.

Economists suggested that some business activity may have been brought forward to earlier months in anticipation of trade disruptions or policy changes.

“However, we shouldn’t get too worried about this negative point. The 3-month data showed healthy growth. Additionally, the Chancellor’s spending review suggests a generous pro-growth government agenda going forward. The Bank of England should be less worried about growth at this point, and more about inflation, especially if the Pound weakens.”