The economy recorded no growth in April, in a sign of the challenges facing the next government after the election.
According to figures from the Office for National Statistics (ONS), the UK economy was stagnant in April after the surprisingly strong expansion in the first quarter of the year.
This was in line with economists’ expectations, but will not make good reading for Prime Minister Rishi Sunak amid an election campaign in which the performance of the economy is a crucial issue.
The all-important services sector grew 0.2 per cent, helping the economy avoid shrinking in April, but production fell 0.9 per cent. Construction recorded an even weaker performance, contracting 1.4 per cent, largely as a result of the weather.
April’s stagnation followed a 0.6 per cent expansion in the first quarter of the year, which took the economy out of last year’s shallow recession.
The UK barely registered any growth in 2023 as it struggled with a cocktail of higher interest rates and stubborn inflation. However a combination of falling inflation, strong wage growth and lower borrowing costs should provide a healthy tailwind for household spending during the remainder of the year.
Over recent weeks a few economic forecasters, including the Confederation of British Industry (CBI) and the British Chambers of Commerce, upgraded their projections for the UK economy on the back of anticipated consumer strength.
Getting the economy firing again is a crucial election pledge for both Keir Starmer and Rishi Sunak. Since the pandemic, it has grown just 1.7 per cent whereas the US economy has grown 8.7 per cent.
Sluggish growth has had a big impact on living standards. The Office for Budget Responsibility (OBR) forecast that disposable incomes won’t recover to pre-pandemic levels until 2025-26.