UK economy flatlines in blow to Rishi Sunak’s hopes of recovery

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The UK economy flatlined in April, held back by wet weather, as the signs of a recovery from last year’s recession began to fade.

In a blow to Rishi Sunak’s hopes of signalling a strong bounceback before the general election on 4 July, the Office for National Statistics (ONS) said monthly growth slowed after a 0.4% increase in March.

The economy was unable to maintain its momentum after being weighed down by the struggling retail sector, a downturn in manufacturing and a drop in construction output.

The 0.0% growth figure matched the forecast by City economists, who blamed the month’s heavy rains for difficulties faced by workers on building sites and the lack of shoppers on the high street.

The shadow chancellor, Rachel Reeves, said: “Rishi Sunak claims we have turned a corner, but the economy has stalled and there is no growth.”

Sunak said in March that the economy was “bouncing back” from a downturn in 2023. Responding to Wednesday’s figures, a spokesperson for the Conservative party said: “There is more to do, but the economy is turning a corner and inflation is back down to normal.”

Manufacturing output fell by 1.4% month on month in April, while construction activity was 1.4% lower and retailers lost 2% of their trade. These declines were balanced out by a 2% rise across the whole services sector, boosted by rises in IT and communication services, professional businesses (1.2%), and arts and entertainment (2.6%).

The general secretary of the Trades Union Congress, Paul Nowak, said the economy’s stagnation was causing long-term harm to households’ incomes. “Our economy is slowing yet again,” the TUC leader said. “This has been the worst government for growth in modern times – and working people have paid the price.”

He said analysis of official figures showed that annual growth had averaged 1.5% since 2010, the worst performance for a government since the great depression. Wages, after taking inflation into account, were worth less than 2008, Nowak added, and unemployment had risen at the fastest rate in the G7 this year. “The Conservatives can spin all they like. But the last 14 years have been dismal for growth and living standards.”

Paul Dales, the chief UK economist at the consultancy Capital Economics, said the economy could begin to grow again during the summer. “Despite the stalling of the recovery in April, the dual drags on economic growth from higher interest rates and higher inflation will continue to fade throughout the year. That will generate a bit of an economic tailwind for the next government,” he said.

Separate surveys of private sector businesses show most areas of the economy have expanded month on month since the beginning of the year.

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Figures released last month showed the economy grew by 0.6% in the three months to the end of March – the strongest rate of quarterly growth since the end of 2021 – confirming the UK had officially exited recession after the economy contracted in the second half of last year.

In the three months to the end of April growth was 0.7%, the same level forecast for the whole year by the International Monetary Fund in its biannual outlook in spring.

The Organisation for Economic Co-operation and Development (OECD) recently downgraded its prediction for UK growth this year from 0.7% to 0.4%. The Paris-based organisation said longer-term issues faced by the UK, including a major skills shortage, high prices in the shops and elevated interest rates, accounted for the gloomy outlook.

Suren Thiru, the economics director at the Institute of Chartered Accountants in England and Wales, said April’s zero growth rate in national income, or gross domestic product (GDP), was unlikely to encourage the Bank of England to cut interest rates at its meeting later this month. “Despite these disappointing GDP figures, a June interest rate cut looks improbable, with the Bank of England likely to be a little wary of shifting policy in the middle of a general election campaign,” he added.


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