LONDON, June 12, 2025 (BSS/AFP) - Britain's economy shrank more than expected in April, official data showed Thursday, in the first month of the Labour government's business tax hike and US President Donald Trump's reciprocal tariffs onslaught.

Gross domestic product contracted 0.3 percent in the month, compared to 0.2 percent growth in March, the Office for National Statistics said in a statement.

That falls below the 0.1 percent contraction expected by economists.

The government on Wednesday laid out its priorities for the coming years, injecting the ailing National Health Service with billions of pounds and pumping funds into defence and housing, while making cuts to other departments.

Finance minister Rachel Reeves has hoped that spending and investment will help spur Britain's sluggish economy, which is under added pressure from Trump's tariffs.

Reeves said Thursday's figures were "clearly disappointing," but insisted that her spending plans would deliver growth for Britain.

While Britain's first-quarter growth beat expectations to rise by 0.7 percent, analysts warned that it was unlikely to be sustained in April.

The latest data covers the period of the introduction of an unpopular hike to a business tax laid out in the Labour government's maiden budget in October.

It also follows the introduction of a baseline 10-percent tariff imposed on the UK and other countries by Trump at the start of April.

This levy remains in place despite the UK and US reaching a deal on trade to lower tariffs on British cars and remove those on steel and aluminium.

The economy faced "subdued overseas demand and domestic businesses cutting back on spending to compensate for the rise in costs driven by April's increase in taxes," said Paul Dales, chief UK economist at research group Capital Economics.

ONS director of economic statistics Liz McKeown said declining output in services and manufacturing weighed on the economy in April.