Image source, Getty Images
- Author, Mitchell Labiak
- Role, Business reporter
The British economy failed to grow in April after particularly wet weather put off shoppers and slowed construction.
The official figures are what most economists expected and come after the fastest growth in two years from January to March, which ended the recession of the latter half of last year.
The economy is a key battleground ahead of the July 4 general election, with the main parties debating whether the latest figures indicate a sustained recovery or stagnation.
The Conservatives claim they show the economy has “turned a corner”, while Labor says they are “exposing the damage done”.
Figures from the Office for National Statistics (ONS) show that spending on services, including everything from hairdressing to hospitality, has grown for the fourth month in a row.
However, this was offset by declines in production and in the construction sector.
Britain’s gross domestic product (GDP), which measures the value of the goods and services produced in a country over time, had grown by 0.4% in March.
Some parts of the services sector performed better than others.
The information, communication and scientific sector grew the most, while retail trade declined.
The ONS said some retail businesses told them their production had been negatively affected by the wetter weather, with rainfall well above the long-term average this month.
However, it added that it was “difficult to quantify the exact impact” of the rainfall.
Output of services for consumers, many of whom are still struggling to cope with the sharp increase in the cost of living, fell 0.7%.
Economists also caution against placing too much weight on shifts in economic activity over a month, as these can be influenced by factors such as the weather or the timing of the Easter holidays.
During the three months to April the economy grew, with an increase of 0.7% between February and April.
The Bank of England, along with a range of others, will look at the figures next Thursday when it meets to decide what to do with interest rates.
However, most economists don’t believe Wednesday’s update will affect the decision much as it was largely in line with expectations.
Many people are struggling not only with higher energy and food bills, but also with higher mortgage costs now that interest rates have risen. The central bank has raised these rates in an attempt to tackle price rises.
One person who has seen the impact of price rises firsthand is Mark Breen, who runs the Old Kent Roastery coffee shop in Margate.
Even as his own costs rise, he hasn’t raised his prices in years because he worries about scaring off customers.
“We get some people, especially in the winter, who come in and have one cup of coffee and sit here all day. It’s the way of life at the moment, people can’t afford to buy things.
“I’m lucky, I have a business. We survive, but a lot of people don’t.”
The latest data comes from the third week of a campaign period in which promises to stimulate the economy have played a key role.
Chancellor Jeremy Hunt said the figures show the economy is “turning a corner”.
“Under the Conservatives we can grow the economy with our clear plan to cut taxes on work, homes and pensions,” he added.
However, Labor shadow chancellor Rachel Reeves focused on April’s flat reading, saying: “These figures expose the damage done after fourteen years of Conservative chaos.”
Liberal Democrat Treasury spokesperson Sarah Olney said: “As Rishi Sunak’s time as prime minister ends, Britain’s economic growth is also slowing.”
Economists had mixed opinions about what the latest numbers mean. Some said it was “positive”, while others said it was “disappointing”.
AJ Bell’s head of financial analysis Danni Hewson said “no growth is better than negative growth” but called the three-month decline in the construction sector “worrying”.
“It is no surprise that political parties are paying so much attention to housing construction,” she added.