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Highlights
- The UK economy shrank by 0.3% in April, the latest data from the ONS revealed on Monday.
- This is the first time that all main sectors - services, production, and construction – have seen negative growth since January 2021.
The UK economy contracted once again in April as oil prices continue to rise and inflation keeps putting severe pressure on businesses. According to the latest data released by the Office for National Statistics (ONS), the Gross Domestic Product (GDP) registered a fall of 0.3% in April 2022. For the first time since January 2021, all major sectors contributed negatively to the monthly GDP, the ONS said.
This comes after it fell by 0.1% in March. In the three months to April, the GDP rose by 0.2%.
The services sector was the key contributor to April's fall in GDP, and it registered a contraction of 0.3% during the month. It saw a 0.2% decline in March, making April the second consecutive month of negative growth in the sector. Inside the services sector, human health and social work activities saw the highest decline of 5.6%, largely due to the reduction in COVID-19 NHS Test and Trace activity after the government announced changes to the testing policies.
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On the other hand, the wholesale and retail sector, along with the repair of motor vehicles and motorcycles sub-sector, was the biggest positive contributor to the services sector. Meanwhile, consumer-facing services grew by 2.6% in April 2022 after falling by 1.8% in March.
The production sector fell by 0.6% during the month, largely driven by a decline in manufacturing. The sub-sector was hit by the alarming rise in input costs, particularly the petrol and energy prices, according to the ONS. Among the sub-sectors in manufacturing that reported a growth are rubber and plastics products, basic metals and products, non-metallic mineral products, and the manufacture of transport equipment.
In terms of the overall performance, the production sector saw a growth of 0.1% in the quarter to April 2022.
The construction sector didn't perform particularly well either and registered a negative growth of 0.4% in April 2022. This was despite the strong growth it posted in March, primarily due to the higher repair and maintenance activity following the storms in February.
This is also the first monthly contraction reported by the sector after October 2021, when it saw a fall of 0.9%. However, April's figures are still significantly higher than the pre-pandemic phase of February 2020.
The UK economy is going through a difficult time, and there are fears that it may hit a recession soon. Recently, the Europe-based intergovernmental think tank Organisation for Economic Co-Operation and Development (OECD) warned that the UK is on the brink of a recession. It said that next year, the country would be the worst-performing economy in the developed world.
The Bank of England (BoE) has also raised concerns over the imminent economic slowdown this year. In the last three months of 2022, the UK economy is likely to shrink instead of expanding, according to the BoE policymakers.
Besides, inflation is also expected to reach 10% by the end of this year, as per BoE.
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