Bob’s Rant : UK Economy Shrinks Again

Chapters

• 0:00 UK GDP Drop: May 2025 Figures
• 0:35 Sector Breakdown of Economic Decline
• 1:14 External Factors Impacting Growth
• 1:35 Critique of Reeves' Economic Management
• 2:39 Looking Forward: Economic Projections

Transcript

Speaker 1: 0:00

Today's drop in UK GDP for May 2025 marks a concerning setback for an economy already grappling with stagnation under Chancellor Rachel Reeves' stewardship 0.1% in May, following a 0.3% decline in April, making it the second consecutive month of shrinkage and defying economists' expectations of a modest 0.1% expansion. This brings the three-month rolling growth to a still positive but underwhelming 0.5%, while year-on-year GDP in May stood at just 0.7% higher than in May 2024. The downturn was primarily driven by sharp falls in key sectors Production output plunged 0.9%, with manufacturing down 1.0%, construction shrank 0.6% and consumer-facing services dropped 1.2%, exacerbated by a 2.7% slump in retail trade. External factors such as impending changes to stamp duty, land tax thresholds and US tariffs under President Trump, which have hit UK exports, and US tariffs under President Trump, which have hit UK exports, particularly in motor vehicles, played a role, but these alone do not excuse the broader malaise. While Reeves has labelled the figures disappointing, this understatement belies a deeper pattern of economic mismanagement since Labour took power in July 2024.

Speaker 1: 1:44

Her tenure has been characterised by a reliance on tax hikes and fiscal tightening, evident in the 2025 Spring Statement and Spending Review, which were pitched as necessary for stability but have instead eroded business confidence and consumer spending. Growth forecasts for 2025 have been halved to a paltry 1%, reflecting diminished optimism amid global uncertainties, like Trump's trade policies. Yet Reeves' responses have been reactive rather than proactive. Critics, including business leaders and opposition voices, argue that her anti-growth measures, such as squeezing benefits and failing to incentivise investment, have amplified domestic vulnerabilities, turning what could have been a soft landing into repeated contractions. Public approval ratings underscore this. Only 16% of Britons view her as doing a good job, with 49% deeming her performance poor. A stark indictment after just a year in office stems from a ideological commitment to redistribution over expansion, prioritising public sector wage hikes and welfare reforms that, while politically expedient, drain resources without addressing productivity bottlenecks or external shocks. The May GDP drop rings alarm bells for the second half of 2025, as one analyst put it, potentially jeopardising even the Bank of England's modest 0.25% quarterly growth projection.