UK economy returns to growth in April as consumer spending improves

The UK economy bounced back in April after it was boosted by stronger spending by Britons in pubs, bars and shops.

UK gross domestic product (GDP) increased by 0.2% for the month after a 0.3% fall in March, the Office for National Statistics (ONS) revealed.

The latest figure was in line with forecasts for the month from economists.

The rise for April was partly caused by a recovery in consumer-facing services, which grew 1% for the month, as Britons spent more on drinking and eating out.

ONS director of economic statistics Darren Morgan 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 statistics body said the overall services industry grew by 0.3% for the month, as it recovered from a 0.5% decline in March.

Industrial action

However, some of the positive impact of improved hospitality and retail spending was offset by industrial action affecting other sectors, such as healthcare.

Mr Morgan added: “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.”

The weak performance from house-builders and estate agents comes amid a backdrop of surging interest rates, which have lifted to a 14-year-high of 4.5% and are expected to keep 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 (International Monetary Fund) 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.”

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.”

Recovery

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.”