Business owners have responded to worrying data published this morning showing the UK suffered a 0.3% dip in GDP during April, worse than the expected 0.1%. It comes just a day after Labour’s Spending Review that saw the Government commit to splurging £300billion on public services.
Company bosses were downbeat in response to the GDP figures and said they are not surprised because they are seeing the signs of contraction in their own businesses.
“Dismal, deflating and delusional”
Harry Mills, Director at Oku Markets, slammed Reeves, calling her performance “dismal, deflating and delusional”.
He added: “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.”
“Absolutely no surprises here”
Meanwhile, David Belle, Trader at Fink Money, claimed Labour’s policies are directly causing the downturn.
He said: “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 and business owners have had enough.”
GDP data raises a serious question
Scott Gallacher, Director at Rowley Turton, was also unsurprised by the figures.
He said: “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.”
Reeves called the figures “very disappointing” and blamed the uncertainty over US President Trump’s tariffs with UK figures showing production and exports weakening.
“A perfect storm for UK businesses”
But Tony Redondo, Founder of Cosmos Currency Exchange, believes businesses have seen the downturn in the economy coming.
He added: “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.”
While Colin Low, Managing Director at wealth managers, Kingsfleet, says the figures are much worse than expected.
He said: “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.”
National Insurance nightmare
Sam Kirk, Managing Director at J-Flex Rubber Products, claimed the downtick was due to National Insurance hikes on businesses.
He continued: “It’s more than just a coincidence that this contraction happened at the same time as businesses 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.”
Though Riz Malik, Director at R3 Wealth, pointed out that it’s not all bad news and it will no doubt lead to interest rate cuts.
He said: “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.”
But Cheryl Chickowski, Director at Cultivate UK, summed up the frustration, adding: “As a small business owner, I feel like all I do is work just to pay taxes. There’s no real relief, no meaningful support, just an ever-growing burden. And while the major parties squabble over soundbites and blame each other for economic woes, they seem to forget who’s actually keeping the economy running — businesses like mine.”
