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UK economy shrinks by 0.3%: "I'm finding Reeves' performance dismal, deflating and delusional"

ended 12. June 2025

The UK's economy has shrunk by 0.3%, worse than the expected 0.1% and the first contraction for six months, GDP data shows this morning. Newspage asked experts and business owners for their experiences at present, why they think the economy is contracting and what the Government is doing wrong. Views below.

8 responses from the Newspage community

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Scott GallacherVerified
Director at Rowley Turton
The 0.3% contraction is worrying, but can hardly come as a surprise. Businesses are under mounting pressure from all directions — higher taxes, rising wage bills, and increasing uncertainty both at home and abroad. National Insurance hikes, a higher minimum wage and steep corporation tax have all driven up the cost of employing people. Meanwhile, fears over the return of Trump-era tariffs are making firms think twice about investing. This latest GDP data raises a serious question: how can the government claim the economy is improving when growth is clearly going backwards? And how did Rachel Reeves not foresee this when announcing the U-turn on winter fuel payments? Labour promised a fully costed, fully funded, credible plan to turn the country around — yet, like most politicians, they seem bothered about the polls than dealing with our problems. That’s a real concern for small businesses and young workers who are being asked to foot the bill.
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David BelleVerified
Founder and Trader at Fink Money
Absolutely no surprises here. Labour’s policies are growth negative and are going to make our debt situation even worse. They simply don’t know what they’re doing.
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Harry MillsVerified
Director at Oku Markets
The Chancellor stood up in Parliament yesterday claiming the UK was “turning a corner”, and then, barely 24 hours later, the latest GDP figures tell a very different story. A 0.3% contraction isn’t just worse than expected, it confirms what many businesses have been feeling for months: the economy is stalling. This was the first monthly decline in GDP for six months, and a clear sign of a soft start to the second quarter. The details are even more concerning: the all-important services sector contracted by 0.4%, while manufacturing output slumped by 0.9%. Higher energy bills, rising employment costs (minimum wage and NICs), increased taxes, and falling confidence are all combining to squeeze margins and stall momentum. Reeves called the figures "disappointing". I'm finding Reeves' performance dismal, deflating and delusional.
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Sam KirkVerified
Managing Director at J-Flex Rubber Products
It's more than just a coincidence that this contraction happened at the same time as buisnesses were faced with increases to National Insurance contributions. While the policy intended to strengthen public finances, it appears to have placed additional strain on households and businesses already navigating high living costs and sluggish demand.
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Colin LowVerified
Managing Director at Kingsfleet
April was the month where we all expected the economy to pause to accommodate the additional business expenses added in the last budget. However, it didn’t slow or even stop, it went into reverse. Even worse, it went into reverse more than anyone had anticipated. The Chancellor will hope that the spending review will stimulate the economy to prevent it being held back by the burden of these new labour costs but confidence is a difficult thing to engender and an easy thing to unsettle.
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Riz MalikVerified
Independent Financial Adviser at R3 Wealth
With a base rate decision looming, a shrinking economy and weak jobs data potentially pave the way for further rate cuts even with inflation above the 2% target. Bad news for the economy could be good news for borrowers.
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Tony RedondoVerified
Founder at Cosmos Currency Exchange
The 0.3% contraction validates what business surveys have been signalling. A recipe made up of the highest tax take since the 1940s, rising inflation and weak consumer confidence as the jobs market weakens, combines to create a perfect storm for UK businesses. Businesses have been seeing weakening demand for months. The Employment Index is at a near-thirteen-year low. Businesses are not replacing leavers and are reluctant to hire after the rise in employer NICs and the minimum wage, plus the new employment bill, limiting economic momentum.
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Harry GoodliffeVerified
Director at HTG Mortgages
A 0.3% dip in the economy isn’t surprising given the pressure on households and businesses right now. High taxes, rising costs, growing unemployment and ongoing uncertainty are all playing a part. It’s easy to always point to global issues like Trump’s trade talks, but a lot of this comes down to domestic policy and the lack of clear direction closer to home.