UK GDP stagnated in April, in blow to claims economy has turned corner – business live | Economic growth (GDP)

TUC general secretary Paul Nowak says:

“Our economy is slowing yet again. This has been the worst government for growth in modern times – and working people have paid the price.

“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.

“The Conservatives can spin all they like. But the last 14 years have been dismal for growth and living standards.

“They have turned Britain into a stagnation nation.”

Wet weather in April derailed the economy’s growth push, experts are explaining this morning.

Lindsay James, investment strategist at Quilter Investors, says:

“The great British weather can be thanked for today’s poor GDP figures, as persistent rain has kept consumers from spending and caused economic growth to grind to a halt for the month with no growth registered. With rainfall in April 55% higher than average and the wettest April since 2012, it is perhaps no surprise to see the economy struggle as a result, with sectors such as retail, construction and pubs all severely impacted.

“Whilst the weather has thankfully improved of late, likely boosting May’s reading, the second quarter is off to a slow start and has a lot of catching up to do if it is to match the 0.6% growth seen in the first quarter.

Ben Jones, lead economist at the CBI, says the cost of living squeeze, as well as the rain which bucketed down in April, also hit growth:

“After one of the wettest Aprils since records began it’s no surprise that rain dampened consumer spending, with many households also feeling the pinch from higher prices and bills.

“But consumers and firms alike are going to start to feel the benefit of lower inflation, which in turn should boost confidence and support spending as we head into a summer packed with major entertainment and sports events, like the Euros.

Paul Dales, chief UK economist at Capital Economics, says:

The stagnation in GDP in April doesn’t mean the economic recovery has been extinguished, but it’s hardly great news for the Prime Minister three weeks ahead of the election.

Happily, Dales doesn’t believe the economy is “on the precipice” of another recession; he points out that other indicators, such as the activity PMIs, suggest the economy is still expanding.

Britain’s economy was dragged down by the factory sector, and by the building sector, in April.

The ONS says:

• Services output grew by 0.2% in April 2024, its fourth consecutive monthly growth, and also grew by 0.9% in the three months to April 2024.

• Production output fell by 0.9% in April 2024 following growth of 0.2% in March 2024, but grew by 0.7% in the three months to April 2024.

• Construction output fell by 1.4% in April 2024, its third consecutive monthly fall, and fell by 2.2% in the three months to April 2024.

Newsflash: the UK economy stagnated in April, a blow to Rishi Sunak’s claim that it has turned a corner.

UK GDP was unchanged month-on-month in April, new data from the Office for National Statistics shows, following growth of 0.4% in March.

That is in line with City expectations, and shows the economy struggled to maintain momentum in April after leaving recession in the first quarter of 2024.

Today’s GDP report will paint a picture of the UK domestic economy, says Thomas Watts, investment analyst at abrdn Portfolio Solutions, and one which the electorate will pay attention to:

GDP is often considered the broadest measurement of the health of an economy, gauging the change in the total value of all goods and services produced by a country. With the UK having just exited a shallow recession with economic growth having re-entered positive territory, many will be hoping that the trend can continue.

The data also takes on added significance as it acts as one of the final pieces of big economic data before the upcoming general election and will be sure to influence voter thinking when heading to the polls.

Good morning, and welcome to our rolling coverage of business, the financial markets, and the world economy.

Rishi Sunak’s claim that “the economy has turned a corner” is about to be tested.

New gross domestic product data, due at 7am, will show how the UK economy fared in April.

It’s the last official healthcheck on UK economic growth before the election, a day after we learned that unemployment rose in the February-April quarter.

The City, on balance, expect no growth during the month, in which bad weather hit retail sales spending.

A Reuters poll of economists found that the consensus forecast is for 0% change in GDP in April. But there’s a range of predictions – from an optimistic +0.2% growth to a gloomy -0.3%.

Even the top of those forecasts would be a slowdown compared with March, when the UK grew by 0.4%, helping the economy exit recession.

Deutsche Bank’s chief UK economist, Sanjay Raja, is among those predicting stagnation in April, saying:

After a thumping end to Q1-24, we expect the UK economy to start out flat as we enter Q2-24. UK GDP, we think, will likely stall in April, weighed down by falls in both the services and manufacturing sectors.

Risks are skewed to a slightly stronger print based on our nowcasts.

Jefferies’ economists Modupe Adegbembo and Mohit Kumar expect growth of 0.2% in April, telling clients:

Growth momentum remains robust in the UK, but monthly numbers tend to be volatile and impacted by factors such as weather. In April, the UK saw one and a half times more rain than usual which is likely to have dampened activity in construction and services.

The agenda

• 7am BST: UK GDP report for April

• 7am BST: UK trade report for April

• 7am BST: German CPI inflation report for May

• 1.30pm BST: US CPI inflation report for May

• 7pm BST: US Federal Reserve sets US interest rates