Bob’s Rant : UK Economy Shrinks Again

Hi, please let me know what you think. Many thanks! Bob M.

Episode Transcript

Speaker 1 (00:00):
Today's drop in UK GDP for May 2025 marks a
concerning setback for aneconomy already grappling with
stagnation under ChancellorRachel Reeves' stewardship 0.1%

(00:29):
in May, following a 0.3% declinein April, making it the second
consecutive month of shrinkageand defying economists'
expectations of a modest 0.1%expansion.
This brings the three-monthrolling growth to a still
positive but underwhelming 0.5%,while year-on-year GDP in May
stood at just 0.7% higher thanin May 2024.

(00:49):
The downturn was primarilydriven by sharp falls in key
sectors Production outputplunged 0.9%, with manufacturing
down 1.0%, construction shrank0.6% and consumer-facing
services dropped 1.2%,exacerbated by a 2.7% slump in

(01:13):
retail trade.
External factors such asimpending changes to stamp duty,
land tax thresholds and UStariffs under President Trump,
which have hit UK exports, andUS tariffs under President Trump
, which have hit UK exports,particularly in motor vehicles,

(01:33):
played a role, but these alonedo not excuse the broader
malaise.
While Reeves has labelled thefigures disappointing, this
understatement belies a deeperpattern of economic
mismanagement since Labour tookpower in July 2024.
Her tenure has beencharacterised by a reliance on
tax hikes and fiscal tightening,evident in the 2025 Spring
Statement and Spending Review,which were pitched as necessary

(01:56):
for stability but have insteaderoded business confidence and
consumer spending.
Growth forecasts for 2025 havebeen halved to a paltry 1%,
reflecting diminished optimismamid global uncertainties, like
Trump's trade policies.
Yet Reeves' responses have beenreactive rather than proactive.

(02:20):
Critics, including businessleaders and opposition voices,
argue that her anti-growthmeasures, such as squeezing
benefits and failing toincentivise investment, have
amplified domesticvulnerabilities, turning what
could have been a soft landinginto repeated contractions.
Public approval ratingsunderscore this.

(02:43):
Only 16% of Britons view her asdoing a good job, with 49%
deeming her performance poor.
A stark indictment after just ayear in office stems from a
ideological commitment toredistribution over expansion,

(03:05):
prioritising public sector wagehikes and welfare reforms that,
while politically expedient,drain resources without
addressing productivitybottlenecks or external shocks.
The May GDP drop rings alarmbells for the second half of
2025, as one analyst put it,potentially jeopardising even

(03:26):
the Bank of England's modest0.25% quarterly growth
projection.