June 14th 2023.
The UK economy made a welcome recovery in April, according to figures released by the Office for National Statistics (ONS). UK gross domestic product (GDP) increased by 0.2% in April, after a 0.3% decline in March.
This was largely driven by a 1% rise in consumer-facing services, such as pubs, bars, and shops. Darren Morgan, ONS director for economic statistics, said: “GDP bounced back after a weak March. Bars and pubs had a comparatively strong April, while car sales rebounded and education partially recovered from the effect of the previous month’s strikes.”
The services industry as a whole increased by 0.3%, a reversal of the 0.5% decline it experienced in March. While this growth was positive, it was partly offset by industrial action affecting other sectors, such as healthcare. “These were partially offset by falls in health, which was affected by the junior doctors strikes, along with falls in computer manufacturing and the often-erratic pharmaceuticals industry. House-builders and estate agents also had a poor month,” Morgan added.
The weak performance of the house-building and estate agents sector may be attributed to the soaring interest rates, which have risen to a 14-year-high of 4.5% and are expected to continue rising. The construction sector reported a 0.6% decline in output for the month.
Chancellor Jeremy Hunt said: “We are growing the economy, with the IMF saying that from 2025 we will grow faster than Germany, France and Italy. But high growth needs low inflation, so we must stick relentlessly to our plan to halve the rate this year to protect family budgets.”
In response to the latest figures, Labour’s shadow chancellor Rachel Reeves said: “Despite our country’s huge potential and promise, today is another day in the dismal low-growth record book of this Conservative Government. The facts remain that families are feeling worse off, facing a soaring Tory mortgage penalty and we’re lagging behind on the global stage.”
Kitty Ussher, chief economist at the Institute of Directors, said: “April’s GDP data shows a recovery in consumer-facing services compared to March, with growth recorded in retail and wholesale trade, accommodation, food and beverage services, and transport. This suggests that households responded to the improving weather in April by raising their levels of discretionary spending – even in the face of rising costs. Businesses in the consumer-facing sectors will be encouraged by today’s data. However, the Bank of England may interpret it as proof that their interest rate hikes have not yet dampened demand enough to reduce inflationary pressure, particularly when combined with yesterday’s strong labour market performance.”
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