UK GDP stagnated in April, as a result of the fallout from the claims the economy has turned around – business

The wet weather in April derailed economic growth, experts explained this morning.

Lindsay Jamesinvestment strategist Quilter Investors, say:

“The good British weather is thanks to today’s poor GDP figures as persistent rain has discouraged consumers from spending and caused economic growth to stall this month with no growth recorded. With April rainfall 55% higher than average and the wettest April since 2012, it is perhaps no surprise that the economy is struggling as a result, with sectors such as retail, construction and pubs all hit hard.

“While the weather has thankfully improved recently, which is likely to have boosted the May figures, the second quarter has gotten off to a slow start and there is still a lot of catching up to do if the 0.6% growth in the first quarter wants to match.

Ben Jones chief economist at the CBI, says that pressure on the cost of living, as well as the rain that fell in April, also negatively affected growth:

“After one of the wettest Aprils on record, it is no surprise that rain has dampened consumer spending, with many households also feeling the pressure of higher prices and bills.

“But both consumers and businesses will start to feel the benefit of lower inflation, which should in turn boost confidence and support spending as we head into a summer full of major entertainment and sporting events, such as the euro.

Paul Daleschief economist of Great Britain Capital Economysay:

The GDP stagnation in April does not mean that the economic recovery has died down, but three weeks before the election it is not good news for the Prime Minister.

Fortunately, Dales does not 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 growing.

The British economy was battered in April by the manufacturing and construction sectors.

The ONS says:

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

• Manufacturing output fell 0.9% in April 2024, after growing 0.2% in March 2024, but grew 0.7% in the three months to April 2024.

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

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

UK GDP was unchanged on a month-on-month basis in April, new data from the Office for National Statistics showed, after growing 0.4% in March.

That is in line with City expectations and shows the economy struggled to maintain momentum in April after emerging from 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 that the electorate will pay attention to:

GDP is often considered the broadest measure of an economy’s health, measuring the change in the total value of all goods and services produced by a country. With Britain having just emerged from a superficial recession and economic growth returning to 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 last pieces of major economic data before the upcoming general election and will certainly influence voters’ thinking as they head to the polls.

Good morning, and welcome to our in-depth coverage of business, financial markets and the global economy.

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

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

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

On balance, the city expects no growth during the month, with poor weather negatively impacting retail spending.

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

Even the top end of these forecasts would mark a slowdown compared to March, when Britain grew by 0.4%, helping the economy emerge from recession.

German Bank‘s foremost British economist, Sanjay Rajais among those predicting stagnation in April, saying:

After a strong end to the first quarter of 2024, we expect the UK economy to start flat as we enter the second quarter of 2024. We think UK GDP is likely to stagnate in April, pressured by declines in both services and as the manufacturing sector.

Based on our nowcasts, the risks have shifted to a slightly stronger footprint.

Jefferies‘economists Modupe Adegbembo And Mohit Kumar expect 0.2% growth in April and tell customers:

Growth momentum in Britain remains robust, but monthly figures are often volatile and influenced by factors such as the weather. In April, Britain received one and a half times more rainfall than normal, which is likely to have dampened activity in the construction and services sectors.

The agenda

• 07:00 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: The US Federal Reserve sets US interest rates