PNN – The latest statistics show that the British economy contracted at the beginning of 2025, contrary to forecasts, and this unexpected decline, which is due to weak industrial production and stagnation in key sectors, has intensified concerns about the country’s economic future and the challenges facing the Keir Starmer government on the path to economic growth.
According to the report of Pakistan News Network, the UK’s Office for National Statistics (ONS) announced on Friday that after the economy grew by 0.4% in December 2024, weak performance in manufacturing and construction led to the UK’s economic growth turning negative at the start of this year, contrary to expectations. The decline is the first monthly decline in GDP after months of weak growth and shows that the country’s economy remains fragile.
Economists say a 1.1 percent drop in industrial production is a key factor in the decline. A slowdown in the construction sector, due to adverse weather conditions and reduced investment, has also prevented the sector from making up for the decline. However, retail and food sales have grown slightly, which some analysts attribute to changing consumer behavior and increased home purchases.
Chancellor Rachel Reeves, who is due to present her fiscal statement to parliament in less than two weeks, said the government remained focused on implementing economic reforms and boosting investment. But independent economic bodies, including the UK’s National Institute for Economic and Social Research, have warned that continued economic volatility and uncertainty over fiscal policy could undermine investor confidence.
Government’s decision to increase military spending in the midst of the economic crisis
The slowdown in British economic growth has come as the Starmer government, facing increasing financial pressures, has decided to implement the largest increase in the British military budget since the Cold War.
This policy, adopted in response to US pressure and Donald Trump’s threat to reduce NATO commitments, has led to cuts in public budgets in other sectors, including healthcare and foreign aid.
The government’s decision to increase defence spending at the expense of the general budget has caused tensions within the cabinet. In this regard, Annalisa Dodds, the former assistant secretary of state for international development, resigned from her position in protest at the cuts in foreign aid to cover defence spending, warning that the policy would undermine the UK’s international commitments.
The economic challenges of the Starmer government: from heavy debts to a recession in the manufacturing sector
The UK economy has faced several crises in recent years. According to the Office for National Statistics, the country’s economic growth in 2024 is expected to be less than 1%, and many key indicators remain in a worrying state.
The UK’s public debt has now reached more than £2.7 trillion, equivalent to 98% of the country’s gross domestic product. High inflation and rising living costs have put further pressure on the government. Rising interest rates have also exacerbated the economic crisis and increased the cost of government borrowing to finance public projects.
At the same time, falling tax revenues and budget pressures have led the British government to increase taxes and reduce public spending, including in the health, education and social assistance sectors.
The government’s decision to dismantle the largest NHS England service has been presented as a way to cut administrative costs, but some analysts have warned that the changes could complicate bureaucracy and lead to increased political interference in the health system.