Category: Uncategorized

The US economy shrank in the first quarter of 2025, marking its first contraction since early 2022, as a surge in imports ahead of President Trump’s sweeping new tariffs dragged down output, official figures show.
Gross domestic product (GDP) fell by 0.3% on an annualised basis between January and March, according to the US Bureau of Economic Analysis (BEA), ending a period of strong post-pandemic growth. The figure was worse than the 0.2% drop expected by analysts and a sharp reversal from 2.4% growth in the previous quarter.
The contraction was largely caused by a 41.3% spike in imports, as businesses rushed to stockpile foreign goods before tariffs took full effect. Since imports subtract from GDP, this surge had a negative impact on the growth figures. America’s goods trade deficit also hit a record high in March.
Wall Street reacted sharply to the news, with early losses across major indices. However, markets stabilised by close: the Dow Jones rose 0.4%, the S&P 500 edged up 0.2%, and the Nasdaq recovered from a steep drop to end just 0.1% lower.
Economists believe the downturn may be temporary. Paul Ashworth of Capital Economics noted that the import surge is already reversing, which “should boost second-quarter GDP.” ING’s James Knightley said businesses were “desperately trying to bring in as many goods as possible ahead of tariffs.”
The downturn coincides with the rollout of Trump’s “liberation day” tariff plan, announced on April 2. The plan imposes a blanket 10% tariff on all imports, a 145% charge on Chinese goods, and additional sector-specific levies. Trump later delayed implementation of most tariffs by 90 days, but core charges remain in place.
Despite the contraction, Trump blamed his predecessor in a Truth Social post:
“This is Biden’s Stock Market, not Trump’s. Tariffs have NOTHING TO DO WITH IT. Our Country will boom… BE PATIENT!!!”
Adding to economic headwinds was a drop in government spending, tied in part to a sharp reduction in public sector staff overseen by Elon Musk, head of the Department of Government Efficiency (Doge).
Major investment banks including Goldman Sachs, JP Morgan, and Morgan Stanley have since downgraded their US growth forecasts. JP Morgan now sees a 60% chance of recession in the coming months.
Inflation also showed signs of re-accelerating. The core personal consumption expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge, rose to 3.5%, up from 2.6% and higher than expected.
Meanwhile, the eurozone economy delivered a rare bright spot, growing by 0.4% in Q1, double the previous quarter’s pace. Germany and France narrowly avoided recession, buoyed by interest rate cuts by the ECB and a new €500 billion investment plan announced by Germany’s incoming chancellor Friedrich Merz.
However, analysts warned that Trump’s tariffs — which currently subject the EU to a 10% blanket rate and could rise to 20% — may weigh on future European growth. Christophe Boucher of ABN Amro called the latest eurozone GDP data “a good surprise,” but cautioned it “does not take into account the ‘liberation day’ shock.”
As global markets adjust to Trump’s protectionist policies, economists are watching closely for signs of deeper disruption — and whether the US contraction marks a blip or the beginning of a broader slowdown.
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US economy shrinks for first time since 2022 as Trump tariffs rattle markets

Families earning £100,000 a year are left with less disposable income than those on minimum wage if they send two children to private school, according to new analysis by financial planning firm Saltus.
The introduction of VAT on private school fees has pushed costs sharply higher, leaving even high-earning parents struggling to cover education costs without making significant sacrifices.
Saltus said families now face an average annual fee of £50,302 to send two children to day school once VAT is applied. Based on current tax rates and household outgoings, a gross income of nearly £150,000 would be required to cover those fees and still retain the UK median disposable income of £37,430 per person.
By comparison, a couple earning the national minimum wage — £23,809 each for a 40-hour work week — would have more disposable income than a household on £100,000 paying private school fees for two children.
Saltus partner Mike Stimpson said: “Even those earning six figures are facing incredibly difficult financial decisions. These are people who have budgeted carefully, planned responsibly and prioritised education, but now they find themselves in a position where earning £100,000 is no longer enough to afford the education they aspire to for their children.”
The figures are based on the Independent Schools Council’s (ISC) most recent census, which found the average annual day school fee is £18,064 per child, or £20,959 for boarders. Saltus factored in VAT of 20%, although schools have reportedly passed on around 14% on average to parents so far.
A pending judicial review, brought by the ISC and others, is challenging the government’s decision to impose VAT on private school fees. They argue the move is discriminatory and infringes human rights, with a ruling expected soon.
Saltus said some families had already taken action — removing children from private school, opting for more affordable options, or seeking financial help from relatives. Others are cutting holidays or extending mortgages to cope.
John Williams, 36, a freelance translator earning £95,000, said his children’s fees rose from £36,000 to £41,500 after VAT.
“We’ve had to tighten our budget significantly. We’re likely to move our daughter to a state school for sixth form,” he said.
“While I understand the argument about charitable status for private schools, many don’t function like true charities — so the tax exemption was always on shaky ground.”
With private school enrolment under renewed financial pressure, the VAT policy is reshaping household budgets — and sparking debate about who should shoulder the cost of education.
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Families earning £100k ‘worse off than minimum wage’ after private school fees, says report

Greene King chief executive Nick Mackenzie has warned that rising business rates and employment costs are putting huge pressure on the UK pub sector, calling on the government to “level the playing field” and deliver meaningful reform by 2026.
Speaking after the October budget, which introduced significant tax changes for hospitality businesses, Mackenzie said Greene King expects to be hit with nearly £50 million in additional costs each year. He also revealed that national insurance increases and minimum wage rises will add a further £24 million annually — a figure that could double when full wage changes are included.
“The industry has been paying a disproportionate amount of rates for many, many years,” said Mackenzie. “We’re urging ministers to work with us to create a fairer system — one that delivers real and lasting change in 2026.”
Labour has pledged to introduce two permanently lower business rates tiers for hospitality, leisure and retail properties with rateable values below £500,000, beginning in 2026–27. But Mackenzie warned that businesses need certainty and support now to safeguard jobs and investment.
Greene King operates 2,600 pubs across the UK, including 878 managed pubs and 1,114 leased and tenanted sites, alongside two breweries. Its portfolio also includes 580 destination pubs under brands like Hungry Horse, Chef & Brewer, Flaming Grill and Farmhouse Inns.
Despite the pressures, Greene King reported 3.2% revenue growth in the year to December 29, reaching £2.45 billion, with strong Christmas trading and events such as Euro 2024 lifting performance. Adjusted operating profit rose 6.4% to £198 million, but statutory figures tell a different story.
A £208.5 million non-cash impairment linked to property and goodwill valuations pushed the company to a statutory operating loss of £16.4 million, compared with a £167.2 million profit a year earlier. Pre-tax losses reached £147.1 million, down from a £45.2 million profit in 2023.
Mackenzie said these impairments reflected not only market uncertainty but also the government’s policy decisions, which have “dramatically increased our costs”. A sharp rise in bond yields added further pressure to property valuations.
While Greene King continues to invest and modernise, Mackenzie stressed the need for government action to support a vital industry. “We need policies that encourage growth — freeing up investment, reducing red tape, and ensuring pubs remain at the heart of our communities.”
Founded in 1799, Greene King is best known for its beers including Greene King IPA, Abbot Ale, and Belhaven. The company was acquired in 2019 by CK Asset Holdings, controlled by Hong Kong billionaire Li Ka-shing, in a £4.6 billion deal.
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Greene King boss calls for business rates relief as budget adds £50 million in annual costs

Britain’s biggest supermarkets are pumping hundreds of millions of pounds into promotional deals as competition in the grocery sector heats up amid ongoing cost of living pressures.
Almost 30 per cent of supermarket spending was on special offers and discounts in the four weeks to 20 April, according to figures from market research group Kantar. The surge in promotional activity equates to £347 million spent on price cuts, many linked to loyalty card schemes.
Fraser McKevitt, head of retail and consumer insight at Kantar, said: “Grocers have been offering big price cuts to stay competitive. They’ve invested in price cuts which were the main driver of promotional growth.” At Tesco and Sainsbury’s, nearly 20 per cent of items sold are part of a price match scheme, featuring in almost two-thirds of customer baskets.
The aggressive push on discounts comes as supermarkets grapple with thin profit margins and intensifying competition. Last month, Asda warned of significantly lower profits this year as it pledged to invest more heavily in lower prices—a move that triggered a £4 billion slump in the combined market value of listed rivals Tesco, Sainsbury’s and Marks & Spencer.
Asda has since cut prices on 1,500 products, including popular items like Cathedral City cheddar cheese and Head & Shoulders shampoo. Since January, Asda said it had slashed prices across nearly 10,000 products. Yet despite these efforts, Asda was the only major supermarket to see a decline in sales over the past three months compared with the same period last year.
While promotional activity is increasing, grocery price inflation remains a challenge for shoppers. Inflation rose to 3.8 per cent in the four weeks to 20 April, its highest level in over a year and well above the recent low of 1.4 per cent in October 2024.
The Easter period helped boost overall spending, with supermarket sales up 11 per cent compared with last year’s Easter run-up, despite a 17.4 per cent jump in chocolate confectionery prices. McKevitt noted that chocolate egg volumes still rose slightly by 0.4 per cent year-on-year, and sunny weather also led to a 31 per cent surge in burger sales as shoppers fired up their barbecues.
In terms of market share, Tesco remains the UK’s largest supermarket with 27.8 per cent, followed by Sainsbury’s at 15.3 per cent and Asda at 12.3 per cent. Aldi holds fourth place with an 11 per cent share, having overtaken Morrisons in 2022. Ocado continues to be the fastest-growing grocer, with sales up 11.8 per cent over the past year, although its overall share remains modest at 1.9 per cent.
With inflation still pressuring household budgets and competition intensifying, supermarkets are likely to keep up the battle for shoppers’ loyalty well into the rest of the year.
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UK supermarkets spend hundreds of millions on promotions as grocery price war intensifies

Keir Starmer’s Labour government has been warned that its tough stance on benefits risks costing the UK economy more than £38 billion a year while pushing more people into poverty and increasing pressure on public services.
The anti-poverty charity the Trussell Trust said that, despite Labour’s repeated promises of no return to austerity, attempts to curb welfare spending could have severe economic and human consequences. In a report commissioned from WPI Economics, the charity argued that Britain’s elevated poverty levels are already sapping potential output and damaging the nation’s finances.
The intervention comes as the government prepares to publish its child poverty strategy in June, amid growing unrest among Labour MPs over the £5 billion in benefit cuts announced by Chancellor Rachel Reeves in her spring statement. Ministers are reportedly ruling out scrapping the controversial two-child benefit limit introduced by the Conservatives, a policy campaigners warn could drive child poverty to record highs.
The Trussell Trust’s report highlights that as many as 9.3 million people, including 3 million children, faced hunger and hardship in the financial year ending March 2023. Defined as living more than 25 per cent below the poverty line set by the Social Metrics Commission, these households struggle with day-to-day essentials.
The economic toll is significant. Lower employment rates and weakened productivity among people in deep poverty mean the UK economy is missing out on £38.2 billion in annual output. This, in turn, deprives the Treasury of £18.4 billion in tax revenues and forces £5.3 billion of extra spending on social security support. Additional demands on services such as the NHS, social care and education are estimated to cost the exchequer another £13.7 billion annually.
Helen Barnard, director of policy, research and impact at the Trussell Trust, urged ministers to urgently rethink their welfare policies, particularly cuts to disability benefits and the maintenance of the two-child limit. “Slashing support for disabled people who most need our collective protection from hunger is cruel, irresponsible, and out of touch with what the public wants,” she said. “Turning this tide would have huge benefits, not just to individuals, but for us all.”
The charity argued that abolishing the two-child limit alone would lift 670,000 people—including 470,000 children—out of hardship, reducing costs to the economy and public services by more than £3 billion.
It also called for the introduction of an “essentials guarantee” within universal credit to ensure that basic living costs are met, a measure that could lift more than two million people out of deep poverty.
A spokesperson for the Department for Work and Pensions defended the government’s approach, saying: “We have set out a sweeping package of reforms to health and disability benefits that genuinely supports people back into work and lifts people out of poverty, while putting the welfare system on a more sustainable footing.”
As Labour prepares its next phase of economic reforms, the warning from the Trussell Trust highlights the political and fiscal risks of pursuing further cuts in a country still grappling with the legacy of years of squeezed living standards.
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Labour’s benefit cuts could cost UK economy billions, warns Trussell Trust

The sugar tax currently applied to fizzy drinks could soon be extended to milkshakes and similar products under new government proposals revealed on Monday.
The Treasury launched a consultation on plans to remove the exemption for dairy-based drinks—and their non-dairy alternatives such as oat and rice milk—bringing them under the scope of the soft drinks industry levy (SDIL). The government is also considering tightening the sugar threshold that triggers the levy, lowering it from 5g to 4g per 100ml.
Chancellor Rachel Reeves first indicated last year that the government would consider broadening the scope of the levy. The Treasury has now confirmed its intention to move ahead with the changes, citing health concerns over the high sugar content of many milk-based drinks.
According to government analysis, about 203 pre-packed milk-based drinks currently on the market—accounting for 93 per cent of the category’s sales—could be affected unless manufacturers reduce their sugar levels.
The SDIL was introduced in 2018 by the Conservative government as part of a broader anti-obesity drive. Milk-based drinks were originally exempted due to concerns over the importance of calcium intake, particularly for children. However, the Treasury now says that such drinks contribute only 3.5 per cent of young people’s calcium intake, suggesting that the potential health benefits of their consumption are outweighed by the risks posed by excess sugar.
“By bringing milk-based drinks and milk substitute drinks into the SDIL, the government would introduce a tax incentive for manufacturers to build on existing progress and further reduce sugar in their recipes,” a Treasury spokesperson said.
Following the introduction of the SDIL, 89 per cent of fizzy drinks sold in the UK were reformulated to avoid the tax, significantly reducing their sugar content.
However, the proposal has drawn criticism from some quarters. Christopher Snowdon, head of lifestyle economics at the free-market thinktank the Institute of Economic Affairs, said: “The sugar tax has been such a dramatic failure that it should be repealed, not expanded. Sugar taxes have never worked anywhere. What happened to Starmer’s promise to not raise taxes on working people?”
The government’s consultation on the proposed changes is open and will run until 21 July, inviting views from industry stakeholders, public health groups and the wider public.
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Milkshakes could face sugar tax under Treasury plans to expand levy

Better Society Capital (BSC), the UK’s leading social impact investor, has reached a major milestone, passing £1 billion in investments aimed at tackling the country’s most pressing social challenges.
Originally launched in 2011 as Big Society Capital, the fund was established with £400 million from dormant bank accounts and £200 million from four of Britain’s biggest high street banks. Over the past 13 years, it has invested in 3,750 charities and social enterprises, making sufficient returns to reinvest and grow its impact. To date, BSC has helped attract almost £3 billion in additional funding from private and philanthropic sources for projects across housing, youth services and healthcare.
Stephen Muers, chief executive of BSC, said the £1 billion figure reflected the success of a model built on recycling capital sustainably: “It shows the value of recycling capital and being sustainable. It is testament to the model. And the reason we have been able to get to that milestone is because the whole market has been growing. There are more investors seeing the potential to realise social impact alongside financial returns.”
Muers pointed to the increasing investment in housing for those at risk of homelessness as a standout example. BSC-backed initiatives like Resonance, a social impact investor managing £325 million in assets, are now providing stable homes for 3,600 people across Greater Manchester, Merseyside, Bristol and Oxford.
“The number of people in precarious housing situations continues to grow — with around 100,000 families currently in temporary accommodation,” Muers said. “We started small in 2014, proving the model by leasing properties to charities. Now, larger investors like local government pension schemes are stepping in, helping scale the solution.”
BSC targets a modest 1 per cent net annual return across its deployed capital over five years, with a 3 per cent return from its investment portfolio to cover operational costs. Although inflation has eroded some of its capital’s real value, BSC views its performance as proof that sustainable, outcomes-focused investment can supplement traditional public spending.
Despite the success, BSC has not received any new dormant account allocations in the past year. The previous government had committed to directing an additional £350 million from dormant accounts to organisations like BSC by 2028.
Meanwhile, the new Labour government has signalled strong interest in using outcome-based investment to “rewire the state”, setting up a social impact investment advisory group to help direct funding. A decision on future allocations is expected in the second phase of the chancellor’s spending review, due later this spring.
Muers said he hoped to see future investments prioritise support for young people and disadvantaged families — especially where traditional public services struggle. “Particularly where there are complex issues that people face, where traditional public services don’t always deal with them very well, where people are passed around between the NHS, schools, local authorities; we have examples of where investment-backed models have been good ways to deliver those services.”
With a growing appetite among investors to achieve social as well as financial returns, Muers said the sector was poised to play a bigger role in helping government meet its long-term social goals. “There is a big prize here, potentially, in bringing to bear investors who want impact on issues that the government cares about and can collaborate well.”
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Better Society Capital surpasses £1bn in investments tackling UK social challenges

More than a quarter of UK workers are worried that artificial intelligence could lead to job losses, according to new research that has prompted calls for businesses to adopt clear policies on AI use and maintain open communication with staff.
A survey conducted by Acas—the public body advising on workplace relations—found that 26 per cent feared AI would cause job cuts. Meanwhile, 17 per cent expressed concerns about AI making errors, and 15 per cent were worried about the consequences of weak regulation.
In response, Acas urged employers to have “open conversations” with employees about how AI will be deployed within their organisations. It also advised businesses to develop clear workplace policies and consult staff on any changes, particularly if the adoption of AI could lead to alterations in job roles or employment terms.
“If there is an expectation that certain roles begin using AI, that could mean a change of terms and conditions,” Acas said. It also emphasised that employers investing in AI should “highlight how it can improve employees’ roles and reassure staff that human involvement will still be needed”.
The findings come amid mounting public debate over AI’s potential to reshape the workforce. Predictions vary widely: the Institute for Public Policy Research warned last year that nearly eight million UK jobs could be lost in a “jobs apocalypse”, with younger and lower-paid workers particularly vulnerable. Meanwhile, the Tony Blair Institute for Global Change suggested that while up to three million private sector jobs could be displaced, the impact would be gradual and largely offset by the creation of new roles.
Neil Carberry, chief executive of the Recruitment and Employment Confederation, responded to the Acas report by urging employers and policymakers to focus on skills development rather than fear. “AI will transform the job market, but history shows technology creates new opportunities even as it disrupts existing roles. Instead of fearing change, we must focus on new skills for workers and preparing for the jobs of tomorrow,” he said.
Carberry also highlighted the importance of Skills England, a new government initiative tasked with identifying and addressing digital skills gaps, in helping workers adapt to the evolving employment landscape.
As AI technology advances, Acas said, proactive communication and careful workforce planning would be crucial in managing the transition and maintaining employee trust.
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One in four workers fear AI could cost them their jobs, Acas warns

Small businesses in the North East of England are preparing to showcase their products and services to buyers from across the globe, as the government’s “Made in the UK, Sold to the World” export roadshow kicks off this week in Blyth, Northumberland.
The event, the first of eight planned across the UK, will see nearly 100 buyers from 19 overseas markets—including South Korea, Mexico, India, Poland and Germany—meet with British exporters, with a particular focus on clean energy firms. The roadshow series will also visit Belfast, Edinburgh, Birmingham and Cardiff, and aims to connect small businesses with international markets more quickly and effectively.
Gareth Thomas, minister for services, small businesses and exports, said: “Through these roadshows, the government is focusing on supporting key growth sectors, making it quicker and easier for smaller businesses to connect with markets, grasp export opportunities and expand.”
Each roadshow will focus on a different sector, with upcoming events dedicated to advanced manufacturing, life sciences, and financial services. In Blyth, alongside the international buyers, 30 commercial officers from UK embassies and consulates will be on hand to offer advice and facilitate connections free of charge.
Among those attending is Alex Marshall, group business development director at Clarke Energy, a manufacturer of gas-powered power generators. Marshall, who also serves as an export champion for the government, welcomed the initiative: “The event is an excellent place to discuss the latest international trends and export opportunities for UK businesses in the clean energy sector.”
In addition to direct meetings, the roadshows will include workshops and seminars led by the government-backed UK Export Academy, offering practical guidance on areas such as market research and routes to market.
Despite strong government support, recent figures suggest that small businesses still face challenges when it comes to exporting. A 2024 study by the Department for Business & Trade found that only 18 per cent of businesses with revenues over £500,000 considered themselves experts in exporting last year, down from 24 per cent the previous year.
Exporters interested in participating in upcoming roadshows can register their interest through the Department for Business & Trade’s official website.
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Overseas buyers line up to hear pitches from small UK exporters at new government roadshow