UK GDP flatlines as PM Sunak pins election campaign on economy

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U.K. economic growth ground to a halt in April, according to flash figures published on Wednesday, stalling the muted rebound from last year’s recession continued. The print came in line with the expectations of economists polled by Reuters. Construction output declined 1.4% in its third straight fall. New high rise tower blocks under construction and old towers in Rotherhithe and beyond to Bermodsey seen over the River Thames on 16th January 2024 in London, United Kingdom. Mike Kemp | In Pictures | Getty Images

LONDON — U.K. economic growth ground to a halt in April, according to flash figures published on Wednesday, stalling the muted rebound from last year’s recession mere weeks ahead of a national election.

Economists polled by Reuters had expected growth to flatten, after the economy expanded by 0.4% in March.

The picture was slightly brighter on a longer timeframe, with gross domestic product up 0.7% in the three months to April.

Construction output declined 1.4% in its third straight fall, while production output was down 0.9%. Growth continued in the U.K.’s dominant services sector, which expanded by 0.2%.

The U.K. had already eked out moderate growth in each of the first three months of the year, leading to an exit from a shallow recession for the first quarter as a whole.

Lindsay James, investment strategist at Quilter Investors, attributed the April slowdown to recent gloomy weather.

“Persistent rain has kept consumers from spending,” James said in an emailed note.

“Whilst the weather has thankfully improved of late, likely boosting May’s reading, the second quarter is off to a slow start and has a lot of catching up to do if it is to match the 0.6% growth seen in the first quarter.”

Rate cut outlook

The quarterly growth reported last month had fueled bets on the Bank of England beginning interest rate cuts in June, but market expectations have shifted significantly since then.

The Bank of England meets to decide the next steps of its monetary policy on June 20. Traders see little chance of a rate cut announcement this month, instead looking toward August or September.

Labor data released on Tuesday showed U.K. unemployment unexpectedly rose to its highest level in two and a half years, while wage growth came in at a higher-than-expected at 6%, presenting a mixed

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