Rachel Reeves in crisis as UK GDP falls and markets react

Rachel Reeves is facing a crisis the morning after unveiling her Spending Review, as new figures have suggested that the UK economy shrank by more than 3% in April. It comes after the Chancellor increased national insurance contributions for employers, and trade tensions following the US President Donald Trump‘s rollout of global tariffs. Industrial production fell 0.6%, an improvement from the prior month, but down 0.3% compared to a 0.7% fall in March. The index of services was down 0.4% month on month, which was worse than expected after a 0.4% gain in March.

Yesterday, stock prices in London ended higher after the US and China negotiators announced a “framework” agreement, while the US consumer inflation print was also softer than expected. The FTSE 100 index closed up 11.27 points, 0.1%, at 8,864.35. The FTSE 250 ended up 39.08 points, 0.2%, at 21,428.54, and the AIM All-Share closed up 2.51 points, 0.3%, at 768.83.

The FTSE is at +1.13 (0.013%) at the time of writing, according to Google’s tracker.

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