In April, the UK economy stagnated with no growth, despite a 0.4 percent expansion in March. This setback came after the country emerged from a recession in the first quarter of the year. The Office for National Statistics released this information ahead of the general election scheduled for next month.
As Britons prepare to head to the polls on July 4, predictions suggest that Labour will win, potentially ending 14 years of Conservative rule under Prime Minister Rishi Sunak. However, this news may not be favorable for the prime minister with just three weeks until the election. According to Paul Dales, chief UK economist at Capital Economics, while GDP stagnation in April does not necessarily indicate an end to economic recovery, it is not a good sign for Sunak as he tries to maintain his grip on power before the election.
In April, services grew by 0.2 percent while production and construction saw declines of 0.9 percent and 1.4 percent respectively. Despite briefly exiting a recession in the first quarter of the year, recent data revealed that British unemployment has increased alongside high earnings growth figures. Inflation data is expected next week, coinciding with a regular Bank of England meeting where interest rates are predicted to remain at a 16-year high.
In an attempt to bridge the electoral gap with Labour leader Keir Starmer, Prime Minister Sunak promised voters tax cuts and reduced immigration in his manifesto launch earlier this year. He also mentioned plans to fund these tax cuts by tightening welfare payments for working-age recipients.
Overall, while GDP stagnation may not necessarily mean an end to economic recovery in Britain, it presents challenges for Prime Minister Rishi Sunak as he prepares for crucial elections next month amid rising inflation and a cost-of-living crisis.
