Volkswacht Bodensee - UK economy stagnates heading into general election

The zero growth in April followed an expansion of 0.4 percent 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.

"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 percent, while production slid 0.9 percent and construction shed 1.4 percent.

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

The UK 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 meeting where the BoE is expected to keep its main interest rate at a 16-year high.

T.Egger--VB