The UK economy contracted by 0.1% in April as the Iran war began to take its toll on growth, official figures show. Higher energy prices resulting from the conflict, after Iran closed the Strait of Hormuz, reversed the strong expansion seen in the first quarter.
The fall in gross domestic product, which had been expected by economists, followed a 0.3% increase in March, according to the Office for National Statistics. Services output declined by 0.2%, partly offset by a 0.1% rise in construction, which was driven solely by an increase in repair and maintenance.
Chancellor Rachel Reeves said the economy was in a stronger position to deal with the costs of the war, adding: '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.'
Over the three months to April, GDP growth was 0.7%, a longer-term perspective that tends to be less volatile. Most forecasters have downgraded their expectations for the UK as higher oil prices drive up inflation and hit growth.
Fergus Jimenez-England, an associate economist at the National Institute of Economic and Social Research, said: 'We expect this slowdown to intensify as higher energy costs feed through the economy, with the impact likely to be felt most acutely in the third quarter.' Thomas Pugh of RSM UK added that political uncertainty, including a potential Labour leadership challenge, would not help the outlook.
