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Hi! As your Hungarian correspondent in London, I must share that PM Rishi Sunak faces mounting challenges within his own party. Recent polls show Conservative support at historic lows, with Labour maintaining a significant lead. The immigration policy debate continues to be a major point of contention.

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The UK is preparing for significant local elections in May. These will be a crucial test for both major parties, especially in key metropolitan areas. Labour is expected to perform well, which could be a preview of the general election.

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Get the latest news and election results in the 2024 Local elections from BBC News

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Breaking news! The Bank of England has maintained interest rates at 5.25%, though there are growing expectations of potential cuts later this year. Inflation remains above target but is showing signs of cooling. As someone observing from Hungary, the comparison with our economic situation is fascinating.

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New trade data shows evolving UK-EU relations. Despite initial challenges, some sectors are adapting well to the new reality. However, small businesses continue to report difficulties with increased paperwork and regulations.

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Five key impacts of Brexit five years on

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The UK left the European Union on 31 January 2020.

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The UK's cost of living crisis remains a significant concern. Energy bills and food prices, while slightly lower than peak levels, continue to strain household budgets. As your Hungarian teacher, I find the British government's response to this particularly interesting to analyze.

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The National Health Service faces ongoing challenges with waiting times and staff shortages. Recent junior doctors' strikes have highlighted the need for systematic changes. Coming from Hungary's healthcare system, the NHS's struggles offer important lessons for healthcare globally.

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"NHS Crisis 2024: Flu, Norovirus, and Winter Pressures Overwhelm Hospitals"

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UK universities face a severe financial crisis, with up to 10,000 academic jobs at risk. Approximately three-quarters of universities could face deficits by year-end, and the lack of a comprehensive bailout contrasts with government support for industries like steel.

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Nationalization of British Steel: The government has nationalized British Steel, citing national security concerns. This move reflects a broader policy shift towards domestic energy and industrial independence. Reuters​

North Sea Oil and Gas: The UK faces a sharp decline in North Sea oil and gas production due to natural depletion and reduced investment, accelerated by a steep 78% tax. The government is reviewing its stance on new exploration licenses, balancing climate targets with energy security needs

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UK retailers are urging the government to address the influx of cheap Chinese fast-fashion products, which enter the market without import duties due to the "de minimis" tax rule. This situation threatens domestic retailers by undermining fair competition and compromising product standards.

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Labor Market Strains: The UK is experiencing job cuts and a decline in vacancies, attributed to increased employer taxes and a 7% rise in the minimum wage. This has led to a weakening labor market, with employment dropping by 78,000 in March—the largest decline since the early pandemic

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As of May 2025, the UK economy is navigating a complex landscape characterized by modest growth, persistent inflationary pressures, and evolving monetary policies. Here's an overview of the current economic situation:

📈 Economic Growth

GDP Growth: The UK economy is projected to grow by approximately 1.7% in 2025, a rebound from 0.8% in 2024, driven by increased government spending and consumer confidence. KPMG

Short-Term Outlook: Goldman Sachs forecasts a more conservative growth rate of 1.2% for 2025, citing uncertainties such as trade relations and domestic policies. Home

💸 Inflation and Monetary Policy

Inflation Rates: The Organisation for Economic Co-operation and Development (OECD) projects UK inflation to average 2.7% in 2025, the highest among G7 nations, influenced by strong wage growth and elevated services inflation. mondaq.com+2maiaccountants.com+2Wilson Devenish+2

Bank of England's Response: The Bank of England (BoE) has initiated interest rate cuts, reducing the base rate from 5% to 4.75% in November 2024. Analysts anticipate further gradual reductions throughout 2025, potentially reaching 3.75% by year-end. Wilson Devenish+2mondaq.com+2maiaccountants.com+2

👥 Labor Market

Unemployment Rate: The unemployment rate is expected to rise slightly to 4.3% in 2025, up from 4.0% in 2023, as businesses adjust to economic conditions. KPMG

Wage Growth: Average earnings are projected to remain above inflation, with salary growth slowing to 4% by the end of 2024 and maintaining that rate through 2025. morningstar.co.uk

📊 Fiscal Policy and Public Debt

Government Spending: Increased public expenditure, as outlined in the autumn 2024 budget, is expected to stimulate economic activity. OECD

Public Debt: Public debt is projected to rise to 92.8% of GDP in 2025, raising concerns about fiscal sustainability. mondaq.com

🌐 External Factors

Trade Relations: Uncertainties surrounding trade agreements, particularly with the United States, could impact export growth and business investment. Latest news & breaking headlines

Global Economic Conditions: Geopolitical tensions and global economic uncertainties may influence the UK's economic performance. KPMG

In summary, while the UK economy is experiencing a period of modest recovery, challenges such as inflationary pressures, rising unemployment, and external trade uncertainties remain. The government's fiscal policies and the Bank of England's monetary measures will play crucial roles in shaping the economic landscape in 2025.