UK economy flatlines in fresh blow to Rishi Sunak’s election hopes

The economy flatlined due to wet weather hitting retail sales over the Easter period, following growth of 0.4% in March

Joe Middleton
Wednesday 12 June 2024 12:30 BST
Comments
Wet weather over the Easter period is believed to have knocked retail sales and construction particularly hard
Wet weather over the Easter period is believed to have knocked retail sales and construction particularly hard (EPA)

Support truly
independent journalism

Our mission is to deliver unbiased, fact-based reporting that holds power to account and exposes the truth.

Whether $5 or $50, every contribution counts.

Support us to deliver journalism without an agenda.

Louise Thomas

Louise Thomas

Editor

The UK economy recorded no growth in April in a blow to Rishi Sunak’s hopes of turning around the Tory Party’s faltering election campaign.

According to data published by the Office for National Statistics (ONS) on Wednesday, gross domestic product (GDP) was flat during the month, following growth of 0.4 per cent in March.

This follows an estimated 0.6 per cent growth in the first quarter of 2024, which pulled the UK out of a small recession at the end of last year.

It also comes just over a week before the next figures on inflation are released and a decision is made by the Bank of England on interest rates.

The latest monthly figure will make grim reading for the prime minister who has made economic growth one of the central pillars of his general election campaign.

In March he said this year will be “prove to be the year that the economy bounces back” after the downturn in 2023. Responding to the figures, chancellor Jeremy Hunt said: “There is more to do, but the economy is turning a corner and inflation is back down to normal.”

Prime minister Rishi Sunak has pegged much of his general election campaign on a recent record of economic improvement
Prime minister Rishi Sunak has pegged much of his general election campaign on a recent record of economic improvement (Getty Images)

Labour’s shadow chancellor Rachel Reeves said the economic growth figures showed the economy has “stalled”.

She said: “Rishi Sunak claims we have turned a corner, but the economy has stalled and there is no growth. These figures expose the damage done after 14 years of Conservative chaos.”

Economists had predicted that GDP would be flat in April, held down by weaker-than-usual sales over the Easter period. Earlier evidence had suggested wet weather knocked retail and construction output particularly hard.

On a quarterly basis, real gross domestic product is estimated to have grown by 0.7 per cent in the three months to April, compared with the three months to January 2024.

Commenting on the figures, TUC General Secretary Paul Nowak said: “Our economy is slowing yet again. This has been the worst government for growth in modern times – and working people have paid the price.

Shadow chancellor Rachel Reeves claimed the economy has “stalled”
Shadow chancellor Rachel Reeves claimed the economy has “stalled” (PA Wire)

“Real wages are still worth less than 2008. Unemployment is rising at the fastest rate in the G7. And economic inactivity is at record levels.”

Paul Dales, UK chief economist at Capital Economics, said the stagnation in GDP figures “doesn’t mean the economic recovery has been extinguished” but that it’s “hardly great news for the prime minister” so close to the election.

Luke Bartholomew, deputy chief economist at asset management giant abrdn, said monthly GDP data can be volatile, and that it is “important not to put too much stead in just one month of data and look at the broader trend across several months”.

He added: “And on that measure, a picture of solid recovery from last year’s recession emerges. This should continue as the year progresses as households benefit from strong real income growth amid falling inflation.”

Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, said: “Despite these disappointing GDP figures, a June interest rate cut looks improbable, with the Bank of England likely to be a little wary of shifting policy in the middle of a General Election campaign.”

Nicholas Hyett, investment manager at Wealth Club, said: “The market had low expectations for the UK economy in April, and it duly delivered.

“In an election month, where every data release will be being watched closely, there’s little here to change the narrative.”

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in