UK slowdown fears mount as GDP unexpectedly shrinks

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Britain's economy unexpectedly shrank in April, official figures showed today, adding to fears of a sharp slowdown just three days before the Bank of England announces the scale of its latest interest rate response to the surge in inflation.

Gross domestic product contracted by 0.3% after falling by 0.1% in March, the first back-to-back declines since April and March 2020, at the start of the coronavirus pandemic.GDP would have expanded by 0.1% excluding the impact of a reduction in the government's coronavirus test-and-trace and vaccination programmes, the Office for National Statistics said.Over the three months to April, GDP was up by 0.2%, weaker than the Reuters poll forecast of 0.4% and slowing sharply from growth of 0.

"But the growth outlook is poor. An already serious squeeze on households' spending power will be negatively affected by the inflationary impact of global supply chain frictions and sterling's recent weakness," Beck said. "Countries around the world are seeing slowing growth, and the UK is not immune from these challenges," he said in a statement.

Economists said there was some encouraging news in Monday's GDP data including a 2.6% increase in consumer-facing services such as hairdressing and the grooming industry. The retail sector also grew by 1.4%.

 

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