UK GDP flatlines in April but Q2 growth remains positive

UK GDP flatlines in April but Q2 growth remains positive

The UK’s GDP remained unchanged in April, but analysts believe the economy is still likely to grow at a decent pace in Q2.

Lower output in the manufacturing, construction, and consumer-facing services sectors was offset by broad strength elsewhere in the services sector. Some of the drags on activity in April were driven by one-off factors, which experts believe will not persist.

Peter Arnold, EY UK chief economist, said: “Monthly GDP data can be noisy and the focus placed upon individual outturns should therefore be measured. Indeed, after three strong month-on-month gains, it was always likely that there would be some payback in April, and a flat outturn beat the EY ITEM Club’s expectations.



“Looking through this volatility, the EY ITEM Club expects GDP to grow at a decent pace in Q2. The drag on some sectors from an early Easter should unwind in May.

“Moreover, early business survey data has signalled that private sector activity growth remained robust across the first two months of the quarter. However, planned strikes in the healthcare sector at the end of June will likely weigh on activity. On balance, the EY ITEM Club expects quarter-on-quarter GDP growth to be slower in Q2 than in Q1.”

Looking further ahead, Mr Arnold concluded: “The EY ITEM Club thinks rising real household incomes and consumer confidence will be the key drivers of stronger economic growth over the rest of this year and into 2025.

“However, tighter fiscal policy and the lagged passthrough of past interest rate rises are likely to mean that the UK economy’s exit from its long period of stagnation will be steady rather than spectacular.”

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