In April, the British economy did not grow, which is a concern for Prime Minister Rishi Sunak as he has made economic growth a key component of the Conservative Party’s election campaign. The Office for National Statistics cited wet weather as a factor that dampened consumer spending and construction activity during the month. This flat reading in April followed a modest 0.6% increase in the first quarter of the year.
The lack of growth in April is likely to be used by political opponents leading up to the July 4 election to criticize the Conservative Party’s handling of the economy. While Treasury chief Jeremy Hunt believes the economy is starting to improve, Labour Party representative Rachel Reeves stated that it has stalled. These latest growth figures come just before the release of inflation data and the Bank of England’s next interest rate decision.
Hopes for a reduction in interest rates from their current 16-year high of 5.25% have decreased after inflation levels did not drop as much as anticipated in April. Despite an annual rate of just 2.3%, inflation remains slightly above the Bank of England’s target and is expected to rise slightly in the near future. The high interest rates have helped control inflation but have also weighed on the British economy.
Given that there will be a general election soon, it is unlikely that the Bank of England will make significant policy changes in June. Sunak recently promised tax cuts and stricter immigration policies in his manifesto, while Labour, currently leading in opinion polls, plans to unveil its manifesto on Thursday
