Economy alert: Another blow for Rachel Reeves as GDP FELL by 0.3% in April

These figures come the day after the Chancellor's Spending Review, which saw Reeves unveil funding boosts for health, infrastructure and energy.

However, analysts have warned the Labour Government's spending plans will likely have to be paid for by raising taxes.

Based on today's ONS figures, Britain's services sector saw growth dip by 0.4 per cent and production fall by 0.6 per cent in April 2025.

However, growth in the UK's construction sector jumped by 0.9 per cent over the period, following the Government's pledge to build 1.5 million new homes to tackle the housing crisis.

April's GDP figures coincide with US President Donald Trump's volatile tariffs, which has seen British industries levied with tariffs of up to 25 per cent.

The Chancellor has faced criticism over her handling of the British economy, however GDP for the first quarter of 2025 rose by a promising 0.7 per cent.

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Despite this win for the Treasury, analysts are noting that Reeves faced little fiscal headroom to navigate the country out of economic stagnation.

Professor Joe Nellis, an economic adviser to accountancy firm MHA, cited that today's figures will "bring the Government back downt o earth".

He explained: "The drop off has proved that this year’s early growth was not sustainable and was driven largely by one-off stimuli such as the export surge in anticipation of tariffs.

"As her array of commitments to public expenditure in the Public Spending Review demonstrated, the Chancellor is acutely aware of the need to build on the momentum of the first quarter and reignite the economy.

"She will be hoping that the front-loading of capital investment — highlights include a £39billion allocation to social and affordable housing, new transport initiatives, a bold push into nuclear energy, and increased defence spending — will provide an immediate boost for the economy, as well as set the foundations for long-term, sustainable growth."

Based on the International Monetary Fund's own (IMF) forecasts, the UK economy is projected to grow by 1.2 per cent over the year.

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Nellis added: "Global trade worries remain, and year-on-year inflation for April at 3.4 per cent is the highest recorded since February 2024.

"While the Bank of England cut interest rates when they last met, they are likely to take a more cautious approach and hold rates at the next meeting.

"This is not an ideal scenario for the Chancellor. The sustainability of her spending promises is critically dependent on changing this — kickstarting the economy to grow GDP and collect more revenue through tax receipts.

"Without this, the Chancellor may be forced into unwanted — and unpopular — tax increases in the Autumn Budget to keep public finances on track."