- UK Economy Returns to Growth in April
- Concerns Over High Inflation and Interest Rate Hike
- Political Responses and Economic Outlook
Although April’s data contains several positive indicators, growth is being hampered by high inflation, which is chewing into the budgets of households and businesses.
The UK economy shrugged off the impact of strikes and returned to growth in April, according to official data showing an increase in retail and restaurant expenditure.
The Office for National Statistics (ONS) recorded a 0.2% expansion after a 0.3% contraction the previous month.
It reported growth of 0.1% for the quarter ending in April.
Director of economic statistics at the ONS, Darren Morgan, commented on the performance: “After a sluggish March, GDP (gross domestic product) rebounded.
“April was relatively robust for bars and pubs, while car sales rebounded and education partially recovered from the previous month’s strikes”.
These gains were partially offset by declines in the health sector, which was impacted by junior physicians’ strikes. Also declines in the computer manufacturing and erratic pharmaceuticals industries.
“House contractors and real estate agents had a difficult month as well.
“Over the course of the last three months, the economy grew slightly, primarily due to the construction industries.
Due in part to the effect of public sector disruptions, the services sector dragged down economic growth.
The IMF and OECD have raised their UK economic estimates recently.
Initially, both had predicted a recession in 2023.
However, there is no cause for celebration, as the growth that has been extensively discussed this year represents only a few tenths of a percent when all factors are taken into account.
High inflation has a substantial impact on consumer and investor confidence.
The Bank of England is expected to raise rates again next week to reduce inflation.
Core inflation—excluding volatile variables like energy and food—remains high, which is troubling.
Moreover, rate-setters would have been alarmed by Tuesday’s wage data, which revealed a steep increase, adding to their concerns that wage settlements to combat the effects of inflation will only exacerbate the United Kingdom’s price pressures.
Last month, Chancellor Jeremy Hunt said he would welcome a recession to lower inflation. This month, he stated that he supports the Bank’s rate hike strategy.
Commenting on the ONS economic data, he added, “We are in a very different position than we were last autumn. The International Monetary Fund and international commentators believe the British economy is on the right track and that the government is taking the right steps to support the Bank of England.
But, like other nations, we have a problem with inflation; it’s higher than people anticipated, and if we want development, if we want prosperity, if we want to alleviate families’ concerns about the rising cost of groceries and living expenses, then we must address inflation.
“This is also how we will achieve long-term development. Therefore, there is no alternative to combating inflation with the necessary vigor. This is what we will do.”
His Labour shadow, Rachel Reeves, responded: “Labour wishes to match the aspirations of the British people, whereas the Conservatives prefer to continue on a path of managed decline, low growth, and high taxes.
Despite our nation’s great potential and promise, this is another day in this Conservative administration’s terrible growth record.
Families continue to feel worse off, face a rising Tory mortgage penalty and are falling behind on the international stage.
Families in every region of our country will be better off as a result of Labour’s mission to secure the highest sustained growth in the G7.
