- The UK economy contracted by 0.3% in April
- The service sector played a huge part in the fall – down 0.4% as increased labour costs impacted confidence
- Global trade uncertainty resulted in a £2.7 billion fall in exports, with the lion’s share of the decline in goods destined for the US
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK GDP and UK trade figures:
“It’s hard not to look at today’s headline fall in economic growth as anything other than inevitable. Company after company had warned the chancellor that the decisions taken during last year’s Budget would impact business growth and create huge uncertainty about existing staffing levels.
“The latest jobs figures highlighted the fall in payrolled employees and rising unemployment earlier this week, and all those bill rises in April delivered another knock to consumer confidence, with the latest BRC retail sales figures showing spending on big ticket items has been reigned back.
“Rachel Reeves has said she is determined to deliver growth, and her spending plans have been given a cautious welcome by business groups up and down the country – but the caution speaks volumes.
“The next five months looks set to see the UK become something of a petri dish, where speculation and rumour fester as concern about rising debt levels feeds expectation that further tax hikes are inevitable.
“It is important not to look at one month’s data in isolation, and over the three months to April the UK economy did grow. But the vigour that was evident at the start of the year was partly down to exporters trying to get ahead of Donald Trump’s trade policies and post-Liberation Day exports in April saw the largest monthly decline in US exports ever recorded.
“The carve-out deal struck by the UK is taking precious time to get over the line and is adding to the general sense of unease from business still waiting for the government to lay out its industrial strategy.
“Construction was a bright spot, and with weak growth expected to further cement the argument for continued interest rate cuts, UK housebuilders and their shareholders are feeling optimistic.
“Can the government’s trade policies and spending plans deliver the promised growth or was the energy demonstrated by the UK economy at the start of the year merely a tease?”
