UK economic growth slows in April – a bad signal for Conservative Party ahead of election

UK month on month gross domestic product was flat in April, in line with expectations after a 0.4% rise in March, while annualized GDP showed rise by 0.6% in April, ticking down from 0.7% previous month and meeting forecasts, but the economy remains 0.6% larger compared to the same period last year, despite weak numbers.

Economic activity in April was mainly driven by the services sector, with rapid expansion seen in information and technology.

On the other hand, activity in manufacturing and construction slowed significantly, with construction output dropping by 1.4% in April from 0.4% contraction in March and strongly missing consensus for a marginal rise by 0.1%, while manufacturing production fell by 1.4% after 0.3% growth previous month and undershooting forecasts for 0.2% ease.

The separate data from the labor sector showed falling employment and rising number of jobless, contributing to dull picture.

Fresh slowdown in Britain’s economic activity in April after a strong start to 2024, sparked attacks to Prime Minister Rishi Sunak from the opposition Labour Party, blaming him for a failure in his pre-election claims of a turnaround, which was one of Sunak’s main election campaign messages, while the data show that economy has stalled and there is no growth.

Economists remain cautiously optimistic and do not see high risk of returning to recession, despite weak April’s data, as the latest slowdown was mainly caused by bad weather which hit construction and retail sectors, while negative impact from high borrowing cost and higher inflation, is expected to continue to fade.