UK economy shrinks 0.1% in April

(Sharecast News) - The UK economy contracted 0.1% in April, according to figures released on Friday by the Office for National Statistics, in line with expectations. This followed growth of 0.3% in March and 0.4% in February. The ONS said the decline was driven by a 0.2% fall in services, which was partially offset by a 0.1% rise in construction. Production showed no growth in April.

The largest negative contribution to services sector output came from administrative and support service activities, which fell by 2.2%

The second largest negative contribution came from arts, entertainment and recreation, which saw a 4.3% decline. This was driven by a fall of 9.1% in sports activities and amusement and recreation activities, some of which can be attributed to effects from the Middle East conflict, with the cancellation of multiple sporting events in the region affecting the output of UK-based businesses, the ONS said.

In the three months to April, the economy grew 0.7%, following growth of 0.6% in the three months to March and 0.5% in the three months to February.

Liz McKeown, director of economic statistics at the ONS, said: "The economy grew in the latest three months as a whole, reflecting strong growth in February and March.

"This was despite April showing a small fall."

Chancellor Rachel Reeves said the conflict in the Middle East was denting the economy.

"Before the conflict in the Middle East, growth was higher than expected and inflation was falling. This is not a war we wanted or joined, but one that will have an impact at home," she said. "Our economic plan is the right one, with both the IMF and OECD upgrading their forecasts for growth recently.

"The choices I have made as Chancellor mean our economy is in a stronger position to deal with the costs of the war, and we are getting on with the job of building a stronger and more secure economy."