Economy

UK economy suffers first back-to-back fall since start of pandemic

There were declines in the manufacturing and construction sectors, down 1% and 0.4% in April respectively

Britain's chancellor of the exchequer Rishi Sunak. April’s 0.3% drop in GDP was the biggest contraction since January 2021, and follows a fall of 0.1% in March. Experts had been expecting a 0.1% rise in GDP in April

Mon Jun 13 2022 - 08:27

The UK economy contracted for the second month in a row in April in the first back-to-back fall since the pandemic struck in 2020 as the cost-of-living crisis and end of the government’s test-and-trace programme took its toll.

The Office for National Statistics (ONS) said gross domestic product (GDP), a measure of the size of the economy, fell by 0.3 per cent in April, with all three main sectors suffering a fall in output for the first time since January 2021.

April’s drop in GDP was also the biggest contraction since January 2021, and follows a fall of 0.1 per cent in March. Experts had been expecting a 0.1 per cent rise in GDP in April.

The ONS said it marked the first time GDP has fallen for two months in a row since March and April 2020, when the pandemic first hit and sent the economy tumbling.

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The figures showed output contracted by 0.3 per cent in the main services sector, largely due to the ending of the government’s Covid-19 test-and-trace programme and lower vaccination activity. With the test-and-trace and vaccines impact stripped out, GDP would have risen by 0.1 per cent in April, the ONS said.

But there were also declines in the manufacturing and construction sectors, down 1 per cent and 0.4 per cent in April respectively, with manufacturers in particular noting the impact of soaring prices and supply chain woes.

The ONS said it was seeing anecdotal evidence widely across the economy of firms being impacted by record fuel and energy prices.

Anecdotal evidence suggests that the manufacturing sub-sector as a whole was affected by increasing prices, in particular petrol and energy prices.

Darren Morgan, director of economic statistics at the ONS, said: “A big drop in the health sector due to the winding down of the test-and-trace scheme pushed the UK economy into negative territory in April. Manufacturing also suffered, with some companies telling us they were being affected by rising fuel and energy prices. These were partially offset by growth in car sales, which recovered from a significantly weaker than usual March.”

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