The British economy saw no growth in April, according to official figures released on Wednesday, dealing a blow to Prime Minister Rishi Sunak and the Conservative Party’s election campaign. The Office for National Statistics reported that wet weather had a negative impact on consumer spending and construction activities during the month. This flat monthly reading followed a 0.6% increase in the first quarter of the year, which Sunak had highlighted on the campaign trail after a period of subdued growth.
While monthly figures can be influenced by short-term factors, the lack of growth is likely to be used by opponents of the Conservatives in the lead up to the July 4 election. Treasury chief Jeremy Hunt remains optimistic, saying that the “economy is turning a corner,” but his Labour Party counterpart, Rachel Reeves, expressed concern that the “economy has stalled.”
The latest growth figures come just before the next round of inflation data is released and the Bank of England announces its next interest rate decision. Expectations for the bank to lower its main interest rate from the 16-year high of 5.25% have decreased after inflation did not fall as much as anticipated in April. Although inflation has dropped to an annual rate of 2.3%, it remains slightly above the bank’s target and is expected to increase slightly in the following months.
The high interest rates implemented to combat inflation have helped in controlling price rises, but they have also put a strain on the British economy. Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, believes that an interest rate cut in June is unlikely due to the Bank of England’s cautious stance during a general election campaign.
Ahead of the election, Sunak has promised tax cuts and reduced immigration if the Conservative Party is reelected and forms the government. On the other hand, Labour, which is currently leading in opinion polls, is set to reveal its manifesto on Thursday.