A view across the River Thames of new high-rise tower buildings and older towers under construction in Rotherhithe and beyond in Bermosey, London, England, on January 16, 2024.
Mike Kemp | Photo | Getty Images
LONDON — Britain’s economic growth ground to a halt in April, according to preliminary figures released Wednesday, stalling a slow recovery from last year’s recession just weeks before a general election.
Economists polled by Reuters had expected the economy to grow at a flat pace after expanding 0.4 percent in March.
Longer term the picture is looking slightly brighter, with gross domestic product growing 0.7% in the three months to April.
Output in the construction sector fell for the third consecutive year by 1.4%, with output also falling by 0.9%. The UK’s core services sector continued to grow, expanding by 0.2%.
The UK has already achieved moderate growth in the first three months of the year, helping to pull the economy out of a mild recession in the first quarter as a whole.
Lindsay James, investment strategist at Quilter Investors, said April’s slowdown was due to recent gloomy weather.
“The persistent rains are holding back consumer spending,” James said in an email.
“Thankfully, recent improvements in weather conditions may have boosted May’s numbers, but the second quarter is off to a slow start and a lot of recovery is needed to match the first quarter’s 0.6% growth.”
Rate cut prospects
Quarterly growth figures released last month strengthened expectations that the Bank of England would begin cutting interest rates in June, but market expectations have changed significantly since then.
The Bank of England meets on June 20 to decide the future direction of monetary policy, and traders say a rate cut is unlikely to be announced this month, with most expecting it to be announced in August or September.
Labour figures released on Tuesday showed Britain’s unemployment rate unexpectedly rising to its highest level in two and a half years, while wages growth came in at a better-than-expected 6%, creating a mixed picture for monetary policymakers.
Figures released on Wednesday showed the value of UK merchandise imports rose 8.2% in April, while exports remained flat.
The latest economic data could become a political ammunition as Britain faces a general election in just over three weeks. The economic performance of the current Conservative government and rival Labour’s proposed tax and spending plans are key battlegrounds in the election. Chancellor Rishi Sunak used his speech to highlight the UK’s recent decline in inflation.
George Roberts, head of trading at Ebury, said the trade figures would be a blow to Mr Sunak as he seeks to win the support of British exporters after a “difficult few years”.
“The financial difficulties facing exporters since Brexit, the coronavirus pandemic and the war in Ukraine appear to be continuing despite the government’s efforts to push through trade deals outside the EU. [Comprehensive and Progressive Agreement for Trans-Pacific Partnership] and recently with the state of Texas,” Roberts said in an email.
Responding to Wednesday’s figures, Labour’s economy spokeswoman Rachel Reeves said: “Chancellor Rishi Sunak claims we’ve turned things around, but the economy is stagnating and there is no growth.”
