Reeves urged to rule out tax rises as GDP falls – Daily Business

A business group has warned the Chancellor against further tax rises after new data showed Britain’s economy shrank in April as the effects of tax rises and the US tariffs kicked in.

The Office for National Statistics (ONS) said Gross Domestic Product (GDP) fell by 0.3% against expectations of a 0.1% fall. The crucial services sector declined along with manufacturing.

GDP still grew by 0.7% over the three months to March, though this may have been a result of firms bringing forward activity to beat the hike in costs introduced in April.

The data comes just hours after Chancellor Rachel Reeves unveiled her plan to “renew” Britain. This morning she said she was disappointed by the April figure.

“Our number one mission is delivering growth to put more money in people’s pockets through our Plan for Change, and while these numbers are clearly disappointing, I’m determined to deliver on that mission,” she said.

“In yesterday’s spending review we set out how we’ll deliver jobs and growth – whether that’s improving city region transport, a record investment in affordable homes or funding Sizewell C nuclear power station. We’re investing in Britain’s renewal to make working people better off”.

Shadow business secretary Andrew Griffith said: “When you introduce a £25billion jobs tax, hike business rates, drive investors overseas and spawn hundreds of pages of extra red tape, lower growth is precisely what you get. You can’t tax and spend your way to growth.”

Alpesh Paleja, deputy chief economist at the CBI, said: ““The latest data means that, at best, we’re heading for near-stagnation over the second quarter.

“Businesses are labouring under the cumulative burden of rises in NICs and the National Living Wage. With the Autumn Budget now coming sharply into focus, the Chancellor should prioritise squashing tax rumours and speculation that risks stymieing confidence and hitting investment plans further.”

Tesco

Tesco is keeping its wide full-year profit guidance unchanged as it noted an “intensely competitive” grocery market.

In the first quarter, like-for-like sales grew 4.6%, led by 5.5% growth in the Republic of Ireland and 5.1% for the rest of the UK. This was up from the 3.1% seen for the past year.