Gross Domestic Product fell 0.3% between March and April, according to data released by the National Statistics Office on Monday, following a 0.1% increase forecast by economists polled by Reuters. April data confirm that the UK’s economic recovery has stalled as two months without growth in the worst combination of rising prices and lack of economic expansion since the 1970s. The pound fell 0.4% against the dollar in early trading in London on Monday. UK Chancellor Rishi Sunak said on Monday: “I want to reassure people, we are fully focused on growing the economy to address the cost of living in the long run. “We have a plan to increase productivity by investing in capital, people and ideas so that everyone across the country can benefit from a strong, healthy economy,” he added. Official figures showed last month that consumer prices rose at an annual rate of 9 percent in April, the fastest in 40 years and the highest of any G7 country. Services fell 0.3 percent and were the main contributors to the fall in GDP in April. The decline reflected a sharp decline of 5.6 percent in health and social work, with a significant decline in NHS Test and Trace activity. Production fell by 0.6% due to the sharp contraction in manufacturing as companies reported the impact of price increases and shortages in the supply chain. Construction fell 0.4% after steady growth in March, when storms in February led to a need for repair and maintenance. GDP growth is set to downgrade the Bank of England’s 0.1% growth forecast for the second quarter, said Samuel Tombs, an economist at Pantheon Macroeconomics. However, with inflation expected to accelerate, he expected the Monetary Policy Committee to raise interest rates by 25 basis points to 1.25 percent at its meeting on Thursday. The Paris-based OECD last week cut its UK growth forecast for 2023 to zero, the lowest in the G20 excluding Russia, reflecting the impact of high inflation and rising rates.
