In April, the British economy faced a setback as official figures revealed that it failed to grow, raising concerns for Prime Minister Rishi Sunak and the Conservative Party. The stagnation was attributed to wet weather impacting consumer spending and construction activity during the month by the Office for National Statistics. This followed a 0.6% growth in the first quarter of the year that had been touted by Sunak in the election campaign as a sign of progress.
The flat growth reading in April is likely to be used as ammunition by the Conservative Party’s opponents leading up to the election on July 4. While Treasury chief Jeremy Hunt remained optimistic about the economy, Labour’s Rachel Reeves characterized the situation as a stall in economic progress.
The looming inflation data and the upcoming Bank of England interest rate decision will add further uncertainty to the economic outlook. Expectations for an interest rate cut have diminished after inflation figures did not drop as much as anticipated in April. High interest rates, intended to curb inflation, have also had a dampening effect on the economy.
Speculation about a June interest rate cut has been tempered by concerns about making policy shifts during a general election campaign. Sunak recently announced tax cuts and reduced immigration as part of the Conservative Party’s manifesto, while Labour is preparing to unveil its plan on Thursday. The economic landscape will continue to be a key issue in the election campaign.
