People with umbrellas on London Bridge.
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LONDON – The United Kingdom's economic growth stalled in April, according to preliminary figures published Wednesday, halting a muted recovery from last year's recession just weeks before a national election.
Economists polled by Reuters had expected growth to remain stable after the economy grew 0.4 percent in March.
The picture was slightly brighter on a longer time frame, with GDP rising 0.7% in the three months to April.
Construction production fell by 1.4%, its third consecutive decline, while production output fell by 0.9%. Growth continued in the UK's dominant services sector, which expanded by 0.2%.
The UK had already achieved moderate growth in each of the first three months of the year, emerging from a shallow recession during the first quarter as a whole.
Lindsay James, investment strategist at Quilter Investors, attributed the slowdown in April to recent gloomy weather.
“Continuous rain has kept consumers from spending,” James said in an email.
“While the weather has thankfully improved recently, which will likely boost May's reading, the second quarter is off to a slow start and has a lot of catching up to do if it wants to match the 0.6% growth we saw in the first quarter. “
Rate cut expectations
The quarterly growth reported last month had fueled bets that the Bank of England would begin interest rate cuts in June, but market expectations have changed dramatically since then.
The Bank of England meets to decide its next steps for monetary policy on June 20. Traders see little chance of a rate cut announcement this month, looking instead to August or September.
Labor data released on Tuesday showed that UK unemployment rose unexpectedly to its highest level in two-and-a-half years, while wage growth came in higher than expected at 6%, presenting a mixed picture for monetary policy makers.
Figures also published on Wednesday showed that the value of UK goods imports rose by 8.2% in April, as the value of exports was flat.
New economic data could serve as political ammunition as the country heads to a general election in just over three weeks. The current Conservative Party's economic record and the tax and spending plans proposed by Labor and its rival are key battlegrounds in the campaign. Prime Minister Rishi Sunak has highlighted the recent decline in UK inflation in his recent speeches.
George Roberts, head of trading at Ebury, said the trade figures would now come as a blow to Sunak, as he strives to win British exporters to his side after a “challenging few years”.
“The financial challenges faced by exporters since Brexit, the Covid-19 pandemic, and the Ukraine war appear to have remained unresolved despite government efforts to push for non-EU trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and “Most recently with Texas,” Roberts said via email.
Following Wednesday's data, Labor economics spokeswoman Rachel Reeves said: “Rishi Sunak claims we have turned the corner, but the economy has stalled and there has been no growth.
