Moist climate helped carry Britain’s financial development to a halt in April after a robust begin to 2024, and the opposition Labour Social gathering jumped on the figures to assault Prime Minister Rishi Sunak’s pre-election claims of a turnaround.
Gross home product was flat in April – as economists polled by Reuters had forecast – after a 0.4 per cent month-on-month rise in March, the Workplace for Nationwide Statistics mentioned.
The figures adopted labour market information on Tuesday that confirmed falling employment and rising unemployment however continued sturdy wage development.
Monetary markets confirmed little response to the figures, with traders nonetheless judging the prospect of a Financial institution of England rate of interest lower subsequent week as distant.
Rachel Reeves, who stands to turn out to be finance minister if the opposition Labour Social gathering wins the election, sought to make use of the information to assault one in every of Sunak’s predominant election marketing campaign messages.
“Rishi Sunak claims we’ve got turned a nook, however the economic system has stalled and there’s no development,” she mentioned instantly after the figures have been revealed.
Present finance minister Jeremy Hunt, from Sunak’s Conservative Social gathering, pointed to figures exhibiting the economic system grew 0.7 per cent over the three months to April, the quickest enlargement for nearly two years.
“There’s extra to do, however the economic system is popping a nook and inflation is again all the way down to regular,” he mentioned.
The Labour Social gathering is heading in the right direction to win the nationwide election on July 4, in response to opinion polls which give Keir Starmer’s social gathering a roughly 20-point lead over the governing Conservatives.
After the shallow recession that lasted via the second half of 2023, the economic system stays solely 0.6 per cent bigger than it was a 12 months in the past, and a pair of.2 per cent greater than its dimension over the past nationwide election of 2019 – a traditionally poor efficiency.
Paul Dales, chief economist at Capital Economics, mentioned the stalling of development in April didn’t increase the danger of a return to recession and appeared linked to moist climate which damage building and the retail sector.
“Total, regardless of the stalling of the restoration in April, the twin drags on financial development from increased rates of interest and better inflation will proceed to fade all year long,” Dales mentioned.
“That may generate a little bit of an financial tailwind for the following authorities.”
The BoE is predicted to start out reducing rates of interest from their 16-year excessive of 5.25 per cent later this 12 months.
Development in April was pushed totally by the companies sector, with data and know-how and the skilled and scientific sectors increasing quickly. Nevertheless, manufacturing and building output – each down 1.4 per cent in month-to-month phrases – fell by greater than any economist polled by Reuters predicted.
