The UK economy shrank again in April as businesses felt the impact of price rises and the NHS COVID Test and Trace operation was wound down. Official figures showed that the economy contracted by 0.3 per cent in April after it shrank by 0.1 per cent the month before.
The economy’s performance in April was weaker than expected, with most analysts having predicted growth of 0.1 per cent. Since January 2021, April was the first time when all the main sectors of the economy – services, manufacturing and production – shrunk. And the latest figure marked the first back-to-back fall since COVID struck.
The risk of a UK-EU trade war is now material, which could push up inflation up and risk investment. Also, there are further pressures on taxes and spend with businesses calling for tax cuts and public sector workers seeking pay rises to match the double-digit inflation. The Bank of England has forecast that inflation could reach more than 10 per cent by the end of the year.