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Sunday, July 27, 2025
Sunday July 27, 2025
Sunday July 27, 2025

Economic nightmare: UK faces grim reality as growth plummets

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The UK economy shrank in the final quarter of 2024, dealing a major blow to chancellor Rachel Reeves’ plans for recovery.

The UK economy has officially contracted, with new figures revealing a decline in gross domestic product (GDP) for the final quarter of 2024. This marks yet another setback for Chancellor Rachel Reeves, who has pledged to revive economic growth under the Labour government.

The Office for National Statistics (ONS) confirmed the economy shrank by 0.1% in the last three months of the year. The Bank of England had previously warned of this contraction after zero growth in the previous quarter. This slowdown threatens the Labour government’s ambitious spending plans, with experts cautioning that a prolonged downturn could trigger job losses and rising inflation.

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Reeves, who took office with a promise to steer Britain toward financial stability, now faces mounting pressure. Critics argue that her decision to increase national insurance contributions and raise the minimum wage may have backfired, forcing businesses to cut jobs and push prices higher.

The Bank of England has already halved its growth forecast for 2025, predicting only a 0.75% expansion before a hopeful recovery in 2026. Economists warn that the UK could be slipping towards stagnation if immediate action is not taken.

Meanwhile, businesses and households are feeling the pinch. Small enterprises, in particular, report struggles to stay afloat amid rising costs. Households, already burdened by soaring energy bills and food prices, brace for further economic strain.

As Britain enters 2025, uncertainty looms large. Will the government intervene with new policies, or is the country heading for a prolonged economic slump? The coming months will prove critical in shaping the UK’s financial future.

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