The UK economy has seen its biggest decline since 2023 as a result of US tariffs

The impact of new US tariffs has been a major factor in the UK economy’s sharpest downturn since 2023.

According to official numbers released on Thursday, the impact of new US tariffs and the expiration of a property tax exemption caused Britain’s economic output to decline more precipitously than anticipated in April.

It was the biggest monthly drop since October 2023, with the GDP contracting by 0.3% from March. The decline exceeded analysts’ forecasts of a 0.1% decline after a 0.2% increase in March.

According to Liz McKeown, director of economic statistics at the Office for National Statistics (ONS), “April saw the largest monthly fall on record in goods exports to the United States, with decreases seen across most types of goods, following the recent introduction of tariffs,” after rising for each of the four months prior.

Following the expiration of a temporary tax incentive on home purchases, real estate and legal activity slowed, which was a major factor in the April downturn. According to the ONS, this was responsible for 0.2 percentage points of the overall 0.3% contraction. Additionally, automakers reported lower output and weakened exports to the US and the EU.

April saw a £2.0 billion ($2.7 billion) decline in British exports to the US alone, the largest monthly decline since records began in 1997.

Sterling dropped a quarter of a cent vs the US dollar in reaction to the data.

The UK economy grew by 0.7% in the first quarter of 2025, outpacing all other advanced economies in the Group of Seven (G7), despite the April setback. The Bank of England increased its full-year prediction to 1% last month as a result of this development.

Business sentiment is still subdued, though. According to surveys, businesses are reducing their investment and recruiting plans in response to the large increase in labor costs that Finance Minister Rachel Reeves implemented in October.