The UK economy showed growth in April despite the impact of strikes, according to official figures released by the Office for National Statistics (ONS). The ONS reported a growth of 0.2% in April, following a contraction of 0.3% in March. It also measured growth of 0.1% over the three months to April. The ONS director of economic statistics, Darren Morgan, commented that “GDP (gross domestic product) bounced back after a weak March”. Bars, pubs, car sales and education all showed growth in April, whilst house builders, estate agents, health, computer manufacturing and the pharmaceuticals industry all experienced falls.
Economic Expectations Upgraded
The ONS announcement follows recent upgrades in UK economic expectations by international organisations such as the International Monetary Fund (IMF) and the Organisation for Economic Cooperation and Development (OECD). Both organisations had initially predicted a recession during 2023.
Inflation and Interest Rates
High inflation has impacted confidence to spend and invest, with the Bank of England expected to implement a further interest rate hike next week. The bank is concerned that the so-called core inflation, which strips out volatile elements such as energy and food, remains stubbornly high. The bank is also concerned about wage data that showed a sharp rise, building on worries that wage settlements to combat the impact of inflation will intensify the UK’s price pressures. Chancellor Jeremy Hunt supported the bank’s rate hike path, stating that the government must tackle inflation to achieve growth.
Labour’s Response
Rachel Reeves, the Labour shadow, responded to the ONS economic data by criticising the Conservative government’s low growth record and the “soaring Tory mortgage penalty”. Reeves stated that Labour’s mission is to secure the highest sustained growth in the G7, which will benefit families across the country.
Overall, the UK economy showed growth in April despite the impact of strikes in the previous month. However, the growth for this year represents only a few tenths of a per cent all considered, and confidence to spend and invest has been impacted by high inflation. The Bank of England is expected to implement a further interest rate hike next week in order to tackle inflation and achieve growth.
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