As April’s data indicate that a COVID crisis anomaly is to blame for output falling into negative territory, the chancellor asserts that the government is “totally focused” on economic growth.
Economists anticipated that the Office for National Statistics (ONS) would confirm a 0.1% increase in the gross domestic product (GDP) for April, following a 0.1% fall in March.
According to the ONS, each major sector of the economy contributed to April’s fall, although the contraction was mostly attributable to a pandemic-related anomaly, including the discontinuation of free COVID tests.
Darren Morgan, it’s head of economic statistics, explained: “In April, the United Kingdom’s economy fell into negative territory due to a sharp decline in the health sector caused by the end of the test and trace scheme.
Some manufacturers informed us that they had been negatively impacted by rising fuel and energy costs.
These were somewhat offset by a rebound in auto sales following a substantially weaker-than-usual March.
The findings corroborate widespread predictions that the economy faces a protracted period of poor growth due to a cost of living issue that is expected to worsen in the coming months as rising energy costs fuel inflation.
Last week, the British Chambers of Commerce and the OECD lowered their growth estimates in response to the forecasts, with the latter saying that the United Kingdom had the lowest outlook of any major economy save Russia.
The CBI bemoaned a “toxic mix” for growth and warned that the economy might become a “distant second” to politics in the coming months due to the cost of the living problem, struggling airports, planned national rail strikes, and “Groundhog Day” conflicts with the EU over the Northern Ireland Protocol.
It was stated that with less than forty days till the summer holiday, the clock is ticking for action to be taken.
The CBI reduced its growth forecast for this year to 3.7 percent from 5.1 percent previously, and for 2023 to 1 percent from 3 percent.
It demanded actions to address labor and skill shortages.
Rain Newton-Smith, the chief economist, added: “These data are difficult to digest. War in Ukraine, a worldwide epidemic, and ongoing pressures on supply networks – all precipitated by Brexit – have proven to be a poisonous cocktail for UK economic growth.
Last month, Chancellor Rishi Sunak announced a £21 billion program to assist families with some of the higher expenditures they face “The global economy is weakening, and the United Kingdom is not immune to these issues.
“I want to reassure the public that we are committed to developing the economy to reduce the cost of living over the long term, while also assisting families and businesses with the acute challenges they face.
“We have a plan to turbocharge productivity by investing in capital, people, and ideas so that everyone in the country may reap the benefits of a robust, healthy economy.”
Rachel Reeves, shadow chancellor, commented on the ONS statistics “These numbers will add to the lingering concern families have about their finances and the future of our economy.
“They will also add to the rising disquiet about the Conservatives’ poor economic growth and plunging living standards.
Instead of effectively addressing the systemic vulnerabilities and instability they’ve created, the Conservatives employ bandages.
