Unexpected decline in UK GDP in April
2022.06.13 09:46
Unexpected decline in UK GDP in April
By Ray Johnson
Budrigannews.com – Official data released on Monday revealed that Britain’s economy unexpectedly contracted in April, raising concerns of a slowdown three days before the Bank of England announces the magnitude of its latest interest rate response to inflation.
From March, the gross domestic product decreased by 0.3 percent. Reuters asked economists to predict a 0.1% increase in gross domestic product (GDP) in April from March.
Since January of last year, all major economic sectors had not contributed negatively to monthly GDP for the first time.
However, the Office for National Statistics stated that if the government had not reduced its coronavirus test-and-trace and vaccination programs, GDP would have increased by 0.1%.
GDP grew by 0.2% in the three months to April, a sharp slowdown from the 0.8% growth in the three months prior. The Reuters poll had predicted growth of 0.4 percent between February and April.
The ONS stated, “Many respondents reported that increases in production costs had affected their business.”
Before the data released on Monday, some economists stated that they had anticipated that the increase in domestic power tariffs introduced in April and the increase in taxes paid by workers would have no effect on the monthly GDP data until May. Finance minister Rishi Sunak stated that Britain was not the only nation experiencing the impact of rising inflation and the consequences of Russia’s invasion of Ukraine.
He said in a statement, “Countries around the world are seeing slowing growth, and the UK is not immune from these challenges.”
The Organization for Economic Co-operation and Development, on the other hand, predicted last week that British gross domestic product would expand by 3.6% this year before flattening at 0% the following year. This was the weakest forecast for 2023 among all of the Group of 20 countries, with the exception of Russia.
The BoE is expected to raise interest rates for the fifth time since December on Thursday, despite the slowdown.
Five times its target, it has predicted that inflation will exceed 10% in the fourth quarter of the year.
Economists and investors alike anticipate another quarter percentage point rate increase this week.
The ONS released separate trade data that showed how sanctions affected Russia. Exports to the country fell to their lowest monthly value since January 1999, and imports fell to their lowest level since March 2004.
More Car sales in Russia have fallen to record level
