Rishi Sunak was dealt a pre-election blow today when official figures showed the economy stalled in April.
Latest data from the Office for National Statistics (ONS) revealed that GDP was unchanged during the month, which was marked by weeks of heavy rain that kept shoppers at home and delayed construction work.
The lacklustre April figure will be particularly disappointing as it follows bumper 0.4% GDP growth in March, and a 0.6% advance over the first quarter as a whole that brought last year’s short recession to an end.
It was that better than expected first quarter data published by the ONS on 10 May that some analysts say made up the Prime Minister’s mind to call the general election 12 days later with a claim that the economy had “turned a corner”.
However, many City economists fear that with little chance of an interest rate cut from the Bank of England before August the economy could slow again, although a return to recession is unlikely.
Gabriella Willis, UK economist at Santander CIB said: “Looking ahead, we see April as the start of more tepid growth in the second quarter, with growth cooling after a solid first quarter rebound.”
The Bank’s Monetary Policy Committee (MPC) meets next week to decide on rates. However, with wage growth running at 6% and services inflation still strong it is thought unlikely it will vote for a cut.
The ONS publishes its figure for inflation in May next week. It is hoped that it fell back to the Bank of England’s 2% target for the first time since July 2021.
Today’s figures show the dominant services sector grew by 0.2% but production output fell by 0.9% while construction was down by 1.4%. Over the three months to April GDP rose by 0.7% compared with the previous three months but only by 0.4% compared with the same quarter in 2023 .
The retail sector fell by 2% in a month when rain kept shoppers at home. The ONS said that feedback from retailers “stated their output reduced because of wetter weather. “Within the construction sector, work on new private housing fell by 4.4%.
Lindsay James, investment strategist at City fund managers Quilter Investors, said: “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. “
