Britain’s economy shrank in April, new figures emerged, as experts warned the country was headed for a recession.
The official date fell 0.3% in gross domestic product (GDP), released today from the Office for National Statistics (ONS).
The latest data comes as millions of Britons face a dire cost of life crisis.
Soaring energy bills and fuel prices are among the everyday costs as inflation soared to 9% – and could climb higher this year.
The country’s leading business group has warned that Britain is facing the most strain on its finances since the 1950s.
CBI also says UK on the verge of recession,
it predicts inflation Seeing a 2.3% drop in real household disposable income by Christmas will reach 8.9%
CBI is also reducing growth forecasts 3.7 per cent this year and just 1 per cent next year.
Economy down 0.1% in the last monthAnd before that 0% growth was registered in the last month.
The ONS said the 0.3% decline in GDP in April is the biggest contraction since January 2021. It is now 0.9% above its pre-pandemic level.
GDP is one of the main indicators used to measure the performance of a country’s economy.
When GDP increases, the economy is generally considered to be doing well.
Negative growth often brings with it declining incomes, job cuts and low consumption.
To measure GDP, the Office for National Statistics (ONS) collects data from thousands of UK companies.
Darren Morgan, director of economic statistics at the ONS, said: “A major slump in the health sector due to the shutdown of the test and trace scheme pushed the UK economy into negative territory in April.
“Manufacturing also had to contend with some companies that they were being hit by rising fuel and energy prices.
“These were partially offset by growth in car sales, which was significantly weaker than a normal March.”
The Bank of England (BOE) uses GDP as one of the key indicators when setting the base interest rate.
The central bank is expected to raise interest rates again this week when they meet on Thursday, June 16.
BoE hikes rates in May For the fourth time, the base rate is now 1% – the highest in 13 years.
Consumers are likely to pass more hikes in the form of higher interest rates on mortgages and other lending.
Savers can earn more on the cash they hold in their accounts, although banks are generally slow to pass on rate increases on savings.
Alice Hahn, personal finance analyst at BestInvest: “The latest GDP data from the ONS sharpens the prospect of the UK heading for a longer period of stagnation – where an economy simultaneously experiences stagnant or low economic growth and high inflation.
“With inflation expected to hit 9% in April and double digits in the fourth quarter, amid rising food, fuel and energy prices, it is natural to expect households to rein in their spending as they spend more time on their monthly income. Strive to meet financial obligations.
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