UK Economic Growth Slows in April – A Negative Signal for the Conservative Party Ahead of Election

UK month-on-month gross domestic product was flat in April, matching expectations after a 0.4% rise in March. The annualized GDP increased by 0.6% in April, down slightly from 0.7% the previous month, in line with forecasts. Despite these weaker numbers, the economy remains 0.6% larger compared to the same period last year.

Economic activity in April was primarily driven by the services sector, with significant growth in information and technology.

Conversely, manufacturing and construction activity slowed considerably. Construction output dropped by 1.4% in April, following a 0.4% contraction in March, significantly missing the consensus forecast of a 0.1% rise. Manufacturing production fell by 1.4% after 0.3% growth in the previous month, also undershooting forecasts of a 0.2% decline.

Separate labor market data showed falling employment and a rising number of jobless, contributing to a bleak overall picture.

The fresh slowdown in Britain’s economic activity in April, after a strong start to 2024, has sparked criticism of Prime Minister Rishi Sunak from the opposition Labour Party. They blame him for failing to deliver on his pre-election promises of an economic turnaround, a key message in Sunak’s campaign, arguing that the data shows the economy has stalled with no growth.

Despite weak April data, economists remain cautiously optimistic, not seeing a high risk of returning to recession. They attribute the latest slowdown mainly to bad weather affecting the construction and retail sectors, while the negative impacts of high borrowing costs and higher inflation are expected to continue diminishing.