New tower blocks under construction and old towers in Rotherhithe and beyond to Bermodsey, seen across the River Thames on January 16, 2024 in London, United Kingdom.
Mike Kemp | In pictures | Getty Images
LONDON – Britain’s economic growth stalled in April, flash figures released on Wednesday showed, stalling the muted recovery from last year’s recession just weeks before a national election.
Economists polled by Reuters had expected growth to slow after the economy grew 0.4% in March.
In the longer term, the picture was somewhat better: gross domestic product rose by 0.7% in the three months to April.
Construction output fell 1.4% for the third straight year, while manufacturing output fell 0.9%. Growth in Britain’s dominant services sector continued, rising by 0.2%.
The UK had already achieved moderate growth in the first three months of the year, leading to an exit from a shallow recession throughout the first quarter.
Lindsay James, investment strategist at Quilter Investors, attributed April’s slowdown to recent dismal weather.
“Continued rain has discouraged consumers from spending,” James said in an email message.
“While the weather has fortunately improved recently, likely giving a boost to May readings, the second quarter is off to a slow start and there is still plenty of catching up to do if it matches the 0.6% growth seen in the first quarter want.”
Interest rate cut outlook
Quarterly growth reported last month had fueled bets that the Bank of England would begin cutting interest rates in June, but market expectations have changed significantly since then.
The Bank of England will meet on June 20 to decide on the next steps in its monetary policy. Traders see little chance of a rate cut announcement this month and are instead looking to August or September.
Labor data released on Tuesday showed that U.K. unemployment unexpectedly rose to its highest level in two-and-a-half years, while wage growth came in higher than expected at 6%, providing a mixed picture for monetary policymakers.
Figures also released on Wednesday showed the value of the UK’s goods imports rose 8.2% in April, while the value of exports stagnated.
The new economic data could serve as political ammunition as the country heads toward general elections in just over three weeks. The incumbent Conservative Party’s economic record and the tax and spending plans proposed by its rival Labor are key battlegrounds in the election campaign. Prime Minister Rishi Sunak has highlighted the recent fall in British inflation in his speeches.
George Roberts, head of trade at Ebury, said the trade figures would be a blow to Sunak as he seeks to win over British exporters after “a challenging few years”.
“The financial challenges faced by exporters since Brexit, the Covid-19 pandemic and the war in Ukraine appear to have persisted despite the government’s efforts to push for non-EU trade deals such as this. “ [Comprehensive and Progressive Agreement for Trans-Pacific Partnership] and more recently with Texas,” Roberts said via email.
Labour’s economy spokeswoman Rachel Reeves said following Wednesday’s data: “Rishi Sunak claims we have turned the corner, but the economy has stalled and there is no growth.”
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2024-06-12 08:04:21
www.cnbc.com
