Rachel Reeves is under mounting pressure ahead of her Spring Statement, with economic experts warning of an “awful April” as the UK grapples with sluggish growth and rising debt.
The Chancellor faces a crucial test on Friday when the latest GDP figures are released, providing a snapshot of the economy’s health just weeks before a series of tax hikes come into effect.
Harry Mills, Director at Oku Markets, suggested the focus will be back on the Government shortly after a relatively easy few weeks.
He explained: “Thanks to PM Sir Keir Starmer’s recent statesmanlike performances and the chaotic Whitehouse causing a distraction, the UK economy has avoided the spotlight for a few weeks.
“That ends on Friday with the latest monthly GDP data set for release ahead of an important month for UK PLC, with various tax rises slated for April.”
Mr Mills highlighted the UK’s economic struggles since Labour took power, pointing to back-to-back quarters of flat or near-flat growth, a debt-to-GDP ratio exceeding 100%, and plummeting business and consumer confidence.
He warned: “No matter which way you look at it, this is an anaemic performance, and it likely won’t ease off soon.”
Friday’s GDP figures are expected to show just 0.1% growth for January, with industrial and manufacturing production contractions. Analysts fear that April’s tax changes, including National Insurance Contributions (NIC) and stamp duty increases, will further dampen economic momentum.
The Office for Budget Responsibility (OBR) is expected to revise its growth projections on March 26, and the Bank of England has already slashed its 2025 forecast in half, reinforcing concerns over prolonged stagnation.
Tony Redondo, Founder at Cosmos Currency Exchange, likened the UK economy to a failing vehicle. “At best, Friday’s MOT on the UK economy will show lots of advisory notes; at worst, the car will be ready for salvage by the end of the second quarter once the tax rises hit home. The UK economy’s limping along, with a knackered gearbox that is stuck between neutral and first gear.”
He warned: “Labour’s ‘awful April’ NIC, stamp duty and other tax hikes plus utility cost increases will keep inflation sticky and leave the Bank of England hoping they will not have to raise interest rates again.
“That would kill the economy stone-dead. The pain is not fully priced in and we still have the spring spending review to be announced on March 26 and export woes if US tariffs bite.”
The upcoming Spring Statement is likely to be a defining moment for Ms Reeves, who must navigate a fragile economy while maintaining Labour’s commitment to fiscal responsibility.
Business leaders are increasingly vocal about the risks posed by higher taxes and regulatory burdens. Gabriel McKeown, Head of Macroeconomics at Sad Rabbit, said: “The idea that Britain’s economy is powering ahead is more wishful thinking than economic reality, as the country struggles to move beyond stagnation with weak growth and waning business confidence.”
Speaking last month, Sir Keir said Ms Reeves would not make “big” decisions on tax and spending.
The PM explained: “We are at the early stages of that, and obviously I am not going to get ahead of myself until we have made decisions.
“But as I have said before, in terms of the big decisions on tax obviously the Budget was the place where we took those decisions – but as ever, going into a statement I am not going to say in advance what we might do and what we might not do.
“But let me not set hares running, the big decisions were in the Budget of last year and that’s the way we are approaching this spring statement.”
Also in February, official figures showed the Government had borrowed £12.8 billion more than the OBR’s forecast for the 10 months to January.