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UK Economy Comes to a Standstill in April, Posing a Challenge for Sunak

UK Economy Comes to a Standstill in April, Posing a Challenge for Sunak

Britain’s economic growth came to a standstill in April due to wet weather, following a strong start to 2024. The opposition Labour Party seized on these figures to criticize Prime Minister Rishi Sunak’s pre-election assertions of a turnaround. Gross domestic product remained flat in April, in line with economists’ forecasts, after a 0.4% rise in March, according to the Office for National Statistics. These numbers followed Tuesday’s labor market data, which indicated declining employment and increasing unemployment alongside robust wage growth.

Financial markets showed little reaction to the figures, with investors still considering the likelihood of a Bank of England interest rate cut next week as remote. Rachel Reeves, potentially the future finance minister if the Labour Party wins the election, used the data to challenge one of Sunak’s key campaign messages, stating, “Rishi Sunak claims we have turned a corner, but the economy has stalled and there is no growth.”

Current Finance Minister Jeremy Hunt, representing Sunak’s Conservative Party, highlighted the economy’s 0.7% growth over the three months to April, the fastest expansion in nearly two years. “There is more to do, but the economy is turning a corner and inflation is back down to normal,” he remarked.

Opinion polls indicate that the Labour Party is likely to win the national election on July 4, with Keir Starmer’s party holding a roughly 20-point lead over the governing Conservatives. Despite emerging from a shallow recession in the latter half of 2023, the economy remains only 0.6% larger than it was a year ago, and 2.2% bigger than its size during the last national election in 2019, representing a historically weak performance.

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