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January GDP: "The real reckoning is expected in April when Labour’s fiscal policy kicks in"

ended 12. March 2025

Ahead of Friday's January GDP data and with “awful April” nearly upon us, Newspage asked a selection of business owners and economists for their views on the current health of the economy — and whether things could deteriorate further from next month. One said: “While Friday’s GDP data will provide a snapshot of the UK at the start of 2025, the real reckoning is expected in April when Labour’s fiscal policy kicks in. This could push the UK into an even deeper economic malaise.” Another added: “At best, Friday’s MOT on the UK economy will show lots of advisory notes; at worst, the car will be ready for salvage by the end of the second quarter once the tax rises hit home.” Views below.

7 responses from the Newspage community

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Tony Redondo
Founder at Cosmos Currency Exchange
At best, Friday’s MOT on the UK economy will show lots of advisory notes; at worst, the car will be ready for salvage by the end of the second quarter once the tax rises hit home. The UK economy’s limping along, with a knackered gearbox that is stuck between neutral and first gear. Early 2025 feels grim with growth forecasts cut to 0.9%. I expect January GDP, out this Friday, to show 0.1% growth at best, reflecting my clients’ slow first quarter with services in first gear and retail, construction, and manufacturing all stuck between neutral and reverse. Labour’s “Awful April” NIC, stamp duty, and other tax hikes plus utility cost increases will keep inflation sticky and leave the Bank of England hoping they will not have to raise interest rates again. That would kill the economy stone-dead. The pain is not fully priced in and we still have the Spring spending review to be announced on 26 March and export woes if US tariffs bite.
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Gabriel McKeown
Political & Economics Writer at Sad Rabbit - Substack Newsletter
The idea that Britain’s economy is powering ahead is more wishful thinking than economic reality, as the country struggles to move beyond stagnation with weak growth and waning business confidence. While Friday’s GDP data will provide a snapshot of the UK at the start of 2025, the real reckoning is expected in April when Labour’s fiscal policy kicks in. This could push the UK into an even deeper economic malaise. The closing months of 2024 offered little reassurance, with GDP expanding by a paltry 0.1% in Q4, following outright stagnation in Q3, leaving the economy far from an inflection point towards recovery. The government’s economic stimulus package may promise a boost to growth, but its tax policies could take back much of what they give, leaving businesses squeezed and confidence further shaken. With early indicators pointing to January growth of 0.1%, the GDP release is unlikely to alter the prevailing narrative, as markets have already priced in continued economic weakness.
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Harry Mills
Director at Oku Markets
Thanks to PM Starmer's recent statesmanlike performances and the chaotic Whitehouse causing a distraction, the UK economy has avoided the spotlight for a few weeks. That ends on Friday with the latest monthly GDP data set for release ahead of an important month for UK PLC, with various tax rises slated for April. Since Labour took over, the UK economy has recorded back-to-back quarters of flat or near-flat growth, debt-to-GDP has risen above 100%, business confidence fell by the most in two years, and consumer confidence hit a more-than one-year low. This Friday's GDP data are expected to show a modest 0.1% expansion between December and January, and both industrial and manufacturing production are seen contracting — again. No matter which way you look at it, this is an anaemic performance, and it likely won't ease off soon. The Bank of England halved its growth forecast for 2025 last month, and the OBR will probably follow suit on the 26th of March.
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Sam Kirk
Managing Director at J-Flex Rubber Products
Labour’s economic strategy is about as effective as expecting Neville Longbottom to defeat Voldemort in the first Harry Potter book. Who knew that hiking taxes, drowning businesses in regulation and throwing public money around like confetti wouldn’t stimulate economic growth? Maybe they think the economy runs on magic? Unfortunately for Severus Starmer and co there’s no ‘Expelliarmus Recession’ spell, so I suppose we’re stuck watching them wave their wands and hoping for the best.
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Pete Mugleston
Mortgage Advisor & Managing Director at onlinemortgageadvisor.co.uk
The economy remains sluggish, with little evidence of a real rebound. Business sentiment has been cautious in early 2025, with cost pressures still biting. Labour’s fiscal tweaks in April – from tax hikes to regulatory shifts – will likely dampen growth further, hitting consumer spending and business investment. Friday’s GDP data will likely confirm stagnation, if not contraction, reinforcing concerns of a prolonged slowdown. While some pain is priced in, April’s changes could push more businesses and households into financial strain. The real question isn’t if the economy will struggle but how much deeper the downturn will go after awful April.
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Richard O'Connor
Director at First Mats
Labour has yet to convince me they've got a credible plan for the economy. While they’re pushing more people into work by cutting costs and reforming welfare, they've simultaneously made employing people more expensive for businesses like mine. This will inevitably lead to fewer job opportunities, the opposite outcome of what they're aiming for. What we genuinely need is an environment that encourages businesses to grow, invest and create sustainable employment. Without this shift in approach, my expectation is that the economy will, at best, stagnate for years. Labour urgently needs to rethink its strategy or risk deepening the economic pain beyond April.
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Faisal Sheikh
Managing Director at Monmouth Capital
When America sneezes, the rest of the world catches a cold. That's my main concern. Whatever is going on in the UK economy, we won't be immune from the waves of uncertainty and disruption emanating from the almost daily policy announcements and reversals at the White House. Now more than ever, therefore, the Labour government needs to take all the action it can to make it easier for UK businesses to compete. What's done is done, and I don't expect a U-turn on the National Insurance increases that have caused so much difficulty for small businesses especially, but at least from this point the Chancellor can fulfil her pledge to promote growth.