The UK economy stagnated in April, hampered by wet weather, as signs of recovery from last year’s recession began to fade.
In a blow to Rishi Sunak’s hopes of signaling a strong rebound ahead of the July 4 general election, the Office for National Statistics (ONS) said monthly growth slowed after a 0.4% rise in March.
The economy has been unable to sustain its momentum after being weighed down by a struggling retail sector, a decline in manufacturing and a decline in construction output.
The 0.0% rise was in line with forecasts from City economists, who blamed the month’s heavy rains for difficulties faced by construction workers and a lack of shoppers on the high street.
Shadow chancellor Rachel Reeves said: “Rishi Sunak says we have turned a corner but the economy has stalled and there is no growth.
Sunak said in March that the economy had “bounced back” from a downturn in 2023. Responding to Wednesday’s figures, a Conservative Party spokesman said: “More needs to be done, but the economy is turning a corner and inflation is back down.” to normal.”
Manufacturing output fell 1.4% month-on-month in April, while construction activity was down 1.4% and retailers lost 2% of their business. These declines were offset by a 2% increase across the services sector, supported by growth in IT and communications services, professional firms (1.2%) and arts and entertainment (2.6%).
The General Secretary of the Trade Union Congress, Paul Nowak, said that the stagnation of the economy is damaging household incomes in the long term. “Our economy is slowing 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 an analysis of official data showed annual growth had averaged 1.5% since 2010, the government’s worst performance since the Great Depression. Wages, adjusted for inflation, were lower than in 2008, Nowak added, and unemployment rose at the fastest rate in the G7 this year. “Conservatives can spin whatever they want.” But the last 14 years have been dismal in terms of growth and living standards.”
Paul Dales, chief UK economist at consultancy Capital Economics, said the economy could start growing again during the summer. “Despite the recovery stalling in April, the dual drags on economic growth from higher interest rates and higher inflation will weaken over the course of the year. This will create a bit of an economic bum for the next government,” he said.
Separate surveys of private sector businesses show that most areas of the economy have expanded month-on-month since the start 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 quarterly growth rate since the end of 2021 – confirming that the UK has officially exited recession after the economy contracted in the second half of last year year failed. year.
In the three months to the end of April, growth was 0.7%, the same level as the International Monetary Fund forecast for the whole year in its spring half-year outlook.
The Organization for Economic Co-operation and Development (OECD) recently cut its UK growth forecast for this year from 0.7% to 0.4%. The Paris-based organization said the longer-term challenges facing the UK, including a major skills shortage, high shop prices and rising interest rates, were behind the gloomy outlook.
Suren Thiru, chief economic officer of the Institute of Chartered Accountants in England and Wales, said April’s zero rate of growth in national income, or gross domestic product (GDP), was unlikely to encourage the Bank of England to cut interest rates at its later meeting. this month. “Despite this disappointing GDP data, a rate cut in June looks unlikely, with the Bank of England likely to be a bit cautious about changing policy in the middle of an election campaign,” he added.