Economy stagnates ahead of general election

BRITAIN'S economy stagnated in April after emerging from recession in the first quarter of the year, official data showed Wednesday ahead of the country's general election next month.

The zero growth in April followed an expansion of 0.4 per cent in March, according to the Office for National Statistics.

Britain votes on July 4 in an election widely expected to be won by the main opposition Labour party, a victory that would end 14 years of rule by the Conservatives, currently led by prime minister Rishi Sunak.

Rachel Reeves, who stands to become finance minister if the opposition Labour Party wins the election, sought to use the data to attack one of Sunak's main election campaign messages.

"Rishi Sunak claims we have turned a corner, but the economy has stalled and there is no growth," she said immediately after the figures were published.

"The stagnation in GDP in April doesn't mean the economic recovery has been extinguished, but it's hardly great news for the prime minister three weeks ahead of the election," noted Paul Dales, chief UK economist at Capital Economics research group.

A breakdown of April's output data showed services grew 0.2 per cent, while production slid 0.9 per cent and construction shed 1.4 per cent.

Britain had emerged from a short-lived recession with growth in the first quarter of this year.

The economy grew by 0.7 per cent in the three months to April, the fastest expansion for almost two years, compared with the three months to January.

Still, the economy remains only 0.6 per cent larger than it was in April 2023, and 2.2 per cent bigger than its size during the last national election of 2019 - a historically poor performance.

The country's economy contracted slightly for two quarters in a row in the second half of 2023, meeting the technical definition of a recession that was caused by elevated inflation that has prolonged a cost-of-living crisis.

Looking to close the gap on Labour, led by Keir Starmer, Sunak on Tuesday promised voters tax cuts and lower immigration as he launched his party's manifesto.

Sunak said his government would pay for lower taxes by cracking down on welfare payments to working-age recipients.

It came as official data Tuesday revealed a rise in British unemployment amid elevated earnings growth.

Inflation data is due next week along with a regular Bank of England (BoE) meeting where it is expected to keep its main interest rate at a 16-year high of 5.25 per cent. (Agencies)