After a robust start to 2024, wet weather contributed to Britain’s economic growth slowing down in April. The opposition Labour Party used this information to criticise Prime Minister Rishi Sunak’s pre-election assertions of a turnaround.

The Office for National Statistics said that the gross domestic product increased by 0.4% month over month in March, but remained flat in April, as predicted by Reuters’ poll of experts.

The findings came as statistics from the labour market showed solid salary growth continuing despite declining employment and growing unemployment.

The numbers elicited no response from the financial markets, as investors continued to view the likelihood of a Bank of England interest rate drop next week as distant.

With the statistics, Rachel Reeves attempted to undermine one of Sunak’s key campaign themes for the election. Reeves is a candidate for finance minister should the opposition Labour Party win.

She remarked as soon as the numbers were released, “Rishi Sunak claims we have turned a corner, but the economy has stalled and there is no growth.”

Sunak’s Conservative Party’s current finance minister, Jeremy Hunt, cited data indicating the economy expanded by 0.7% in the three months leading up to April—the quickest growth in over two years.

“There is more to do, but the economy is turning a corner and inflation is back down to normal,” he stated.

New import taxes of up to 38.1% are being imposed by the EU on Chinese electric cars.

Keir Starmer’s Labour Party is expected to defeat the ruling Conservatives by almost 20 points in the July 4 general election, based on opinion surveys.

The economy is still just 0.6% greater than it was a year ago and 2.2% bigger than it was before the most recent national election in 2019—a historically weak performance—after the brief recession that continued until the second half of 2023.

Paul Dales, chief economist at Capital Economics, stated that the slowdown in growth in April appeared to be related to the rainy weather that negatively impacted the retail and construction industries, but it did not increase the likelihood of a recession returning.

“Overall, despite the stalling of the recovery in April, the dual drags on economic growth from higher interest rates and higher inflation will continue to fade throughout the year,” Dales said.

“That will generate a bit of an economic tailwind for the next government.”

Later this year, the BoE is anticipated to begin reducing interest rates from their 16-year high of 5.25%.

The services sector was the only one to grow in April; the professional and scientific industries, as well as information and technology, expanded at a quick pace. But the output of manufacturing and construction, which both down 1.4% on a monthly basis, decreased more than any Reuters economist survey had projected.

(Adapted from Reuters.com)

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