The UK economy delivered a disappointing performance in April 2024, registering precisely 0.0% growth and missing analyst forecasts. This stagnation has sent shockwaves through financial markets, with the FTSE 100 index falling sharply in response.
Market Reaction and Sector Performance
London's premier share index, the FTSE 100, fell by 28 points (0.35%) to 8,145 early on Wednesday. The mid-cap FTSE 250 also dropped significantly, declining by 0.6%. The bleak economic data has clearly rattled investor confidence, casting a shadow over the UK's economic outlook.
Key Drivers of the Economic Stall
The Office for National Statistics (ONS) reported that the services sector managed a meagre 0.2% growth, which was completely offset by substantial declines elsewhere.
- Construction output plummeted by 1.4%, a severe contraction for the sector.
- Production output fell by 0.9%, with manufacturing alone down 1.4%.
This data suggests the economy lost momentum after a 0.4% growth figure in March, failing to maintain any positive trajectory.
Expert Analysis and Economic Implications
Ruth Gregory, Deputy Chief UK Economist at Capital Economics, noted that while the figures are 'disappointing,' they are unlikely to prevent the Bank of England from cutting interest rates soon. However, she acknowledged that the 'big picture is that the economy is growing slowly.'
The stagnant GDP figure presents a significant challenge for the government, which has been hoping for a robust economic recovery. With key sectors like construction and manufacturing in decline, concerns about a potential technical recession are mounting among economists and policymakers.
