On Wednesday, disappointing news was released as the British economy failed to experience any growth in April. Prime Minister Rishi Sunak, who has been focusing on promoting economic growth and stability during his election campaign, is likely to face criticism from political opponents. The Office for National Statistics reported that consumer spending and construction were negatively impacted by wet weather during the month, leading to the flat growth rate.
Despite a 0.6% increase in the first quarter of the year, the lack of growth in April is likely to be used by political opponents in the lead-up to the upcoming election on July 4. While Treasury chief Jeremy Hunt remains optimistic about the economy, Labour Party’s Rachel Reeves stated that the economy has stalled. The timing of the latest growth figures, just before the release of inflation data and Bank of England’s interest rate decision adds further complexity.
There were hopes within the Conservative Party that Bank of England would lower interest rates from its current 16-year high of 5.25%. However, after inflation in April failed to decrease as expected, this possibility has diminished. High interest rates have been effective in curbing inflation but have also had a dampening effect on the British economy. Suren Thiru, economics director at Institute of Chartered Accountants in England and Wales believes that a rate cut in June is unlikely especially during an ongoing general election campaign.
Rishi Sunak recently announced that if his party gets reelected they plan to reduce taxes and immigration while Labour currently leading in opinion polls will release their manifesto on Thursday which will be an important point of debate leading up to election day.
