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General election 2024: UK economy stagnates in April, official figures show | business news

General election 2024: UK economy stagnates in April, official figures show |  business news
General election 2024: UK economy stagnates in April, official figures show |  business news

 


The British economy slumped in April, according to official figures seized by government critics as evidence that plans heralded by the Conservatives are not working.

The Office for National Statistics (ONS) said growth was zero in April, compared to 0.4% recorded in March.

A Reuters poll of economists had forecast a 0% performance, based on previous evidence that retail sales and construction output had been hit particularly hard by the wet weather.

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The ONS's last Gross Domestic Product (GDP) report ahead of the election showed that overall rainfall in the UK for April was 155% of the long-term average.

The results showed a 1.4% decline in construction output, which was also affected by weak demand for construction products from the manufacturing sector, statistical analysts said.

Production fell by 0.9%, while the services sector, which accounts for nearly 80% of total UK output, grew by just 0.2%.

Despite highlighting the hit from the rain, the figures still represent a setback for Chancellor Rishi Sunak's key election claim that the economy is improving after successive blows from the Covid-19 pandemic and the cost of living crisis.

The UK emerged from a short-term recession at the end of 2023, with growth of 0.6% in the first quarter of this year.

Economists continue to see growth in the three months to June, but expect growth of about 0.3%, half the rate achieved between January and March.

Ahead of voting day on 4 July, final inflation figures will be released and Bank of England interest rates will be set the following day.

Financial markets and economists see little chance of a rate cut on June 20 because the pace of wage growth risks further fueling inflation after significant progress in fighting inflation.

The current consumer price index is 2.3% and is expected to fall further when May figures are released.

Prime Minister Jeremy Hunt said: “There is more work to do, but the economy has turned around and inflation is back to normal.”

He added that the Conservatives would “continue to grow the economy with a clear plan to cut taxes on jobs, homes and pensions”.

But shadow chancellor Rachel Reeves said of the ONS data: “Rishi Sunak claims we have turned the corner, but the economy is stagnant and there is no growth.”

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1:44 UK economy stagnates in April

“These figures reveal the damage done after 14 years of Tory turmoil.

“We are now three weeks into the general election and Labor has put forward a plan to grow the economy by restoring stability, stimulating private sector investment and reforming the planning system.

“Everything the Conservatives are proposing is more like a desperate wish list of unfunded spending promises that would mean £4,800 more on people's mortgages. Rishi Sunak's plans are a recipe for another five years of Tory chaos.”

Sarah Olney, the Lib Dem treasury spokeswoman, said April's slow growth showed the Conservatives had “completely failed” to deliver on their promises.

“As Rishi Sunak’s term as chancellor draws to a close, economic growth in the UK is slowing,” she said.

“The Conservatives have utterly failed to deliver the growth they have repeatedly promised, and instead have presided over recession and economic misery for hard-working families across the country.

“The Conservatives’ manifesto shows they lack the ambition and vision to get the economy moving again.

“It is clear to voters across the country that the only way to make this happen is to vote them out of office on the Fourth of July.”

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Yael Selfin, Chief Economist at KPMG UK, commented on the outlook: “Forward-looking indicators indicate renewed momentum in activity in the coming months, driven by improving consumer sentiment, with wage growth remaining strong.

“An early summer general election could help resolve political uncertainty and stimulate business investment.

Nonetheless, whichever party wins the election will have to contend with a number of supply-side issues that limit the UK's long-term growth potential.

“We expect economic activity to remain historically sluggish this year, with growth likely to be just 0.5%.”

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