Economy shrugs off strikes to return to growth, aided by shopping and nights out
The UK economy shrugged off the impact of strikes to return to growth in April, according to official figures charting a pick-up in spending at the shops and in bars and restaurants.
The Office for National Statistics (ONS) measured growth of 0.2% following a contraction of 0.3% in the previous month.
It reported growth over the three months to April was 0.1%.
ONS director of economic statistics, Darren Morgan, said of the performance: “GDP (gross domestic product) bounced back after a weak March.
“Bars and pubs had a comparatively strong April while car sales rebounded and education partially recovered from the effect of the previous month’s strikes.
“These were partially offset by falls in health, which was affected by the junior doctors’ strikes, along with falls in computer manufacturing and the often-erratic pharmaceuticals industry.
“House builders and estate agents also had a poor month.
“Over the last three months as a whole the economy grew a little, driven largely by the construction industries.
“The services sector dragged growth downwards, partly due to the impact of public sector strikes.”
The ONS update follows hot on the heels of upgrades in recent weeks to UK economic expectations by key international bodies such as the IMF and OECD.
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OECD chief explains high UK inflation
Both had initially predicted a recession during 2023.
However, there is no cause for celebration as the growth being widely talked for this year represents just a few tenths of a per cent all considered.
Confidence to spend and invest is being dented heavily by high inflation.
The Bank of England is widely tipped to act further on the pace of rising prices by imposing a further interest rate hike next week.
It is worried that so-called core inflation, which strips out volatile elements such as energy and food, remains stubbornly high.
Rate-setters would have also been concerned by wage data revealed on Tuesday that showed a sharp rise, building on worries that wage settlements to combat the impact of inflation will just intensify the UK’s price pressures.
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Leap in basic wage growth
Chancellor Jeremy Hunt, who told Sky News last month he was comfortable with the idea of a recession if it helped bring down inflation, said he backed the Bank in its rate hike path.
Commenting on the ONS economic data, he added: “We are in a very different situation to where we were last autumn, the International Monetary Fund, the international commentators, think the British economy is on the right track, that the government is doing the right thing to support the Bank of England.
“But like other countries, we have an issue with inflation, it’s higher than people expected and if we want growth, if we want prosperity, if we want to remove that worry that families have about the increase in the weekly shop, the cost of living going up, then we have to tackle inflation.
“And that is also the way we will get long term growth. So there is no alternative to tackling inflation with every bit of vigour that is needed. And that’s what we’ll do.”
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His Labour shadow, Rachel Reeves, responded: “Labour wants to match the ambition of the British people – while the Tories would rather continue down a path of managed decline of low growth and high taxes.
“Despite our country’s huge potential and promise, today is another day in the dismal low growth record book of this Conservative government.
“The facts remain that families are feeling worse off, facing a soaring Tory mortgage penalty and we’re lagging behind on the global stage.
“Labour’s mission to secure the highest sustained growth in the G7 will make families across every part of our country better off.”
Business
‘Knock-back for London’ as AstraZeneca sells shares directly on rival New York Stock Exchange
One of the UK’s most valuable listed companies is to sell its shares directly on the rival New York Stock Exchange, in a move described as a “knock back for London”.
While AstraZeneca will maintain its headquarters in the UK and its primary stock listing on the London Stock Exchange, the news can be seen as a move away from London.
“Although there has been no suggestion that AstraZeneca is imminently going to up sticks and move its primary listing from London, there may be some nervousness this morning around the risk that the UK market might lose one of its largest constituents,” said Russ Mould, the investment director of investment platform AJ Bell.
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The news “does at least hint at the possibility of a more dramatic shift at some point in the future”, Mr Mould said.
There may also be relief that AstraZeneca is not moving from the London Stock Exchange altogether.
“I think there is probably relief that it’s not pursuing a primary listing in New York, but the decision is hardly a ringing endorsement of London,” said Neil Wilson, the UK investor strategist at investment platform Saxo Markets.
“It reflects the fundamental, structural issues in the UK for the largest globally-oriented stocks – the depth and liquidity of its capital markets is falling short of what’s on offer across the pond.”
“It’s also a bit of a knock-back for London”, Mr Wilson said.
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The Cambridge-based pharmaceutical company said the decision to sell shares directly on the New York Stock Exchange – rather than the previous less straightforward system of using American depository receipts – has been made to allow it “to reach a broader mix of global investors” and “make it even more attractive for all our shareholders”.
“The US has the world’s largest and most liquid public markets by capitalisation, and the largest pool of innovative biopharma companies and investors,” the company said in an announcement to investors.
AstraZeneca’s share price was up 0.7% on the news.
Jaguar Land Rover (JLR) has announced it will partially resume manufacturing “in the coming days” after nearly a month in the wake of a cyber attack.
The luxury car-making plants have paused production since 31 August. The cyber attack halted car-making across the supply chain, with staff off work as a result.
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More than 33,000 people work directly for JLR in the UK, many of whom are on assembly lines in the West Midlands, with the largest facility located in Solihull, and a plant in Halewood on Merseyside.
Roughly 200,000 more are employed by several hundred companies in the supply chain, who rely on JLR orders as their biggest client.
“As the controlled, phased restart of our operations continues, we are taking further steps towards our recovery and the return to manufacture of our world-class vehicles,” a company spokesperson said.
The shutdown was said to last until at least 1 October.
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“Today we are informing colleagues, retailers and suppliers that some sections of our manufacturing operations will resume in the coming days,” the company added, days on from the partial restart of its IT systems, which allowed supplier payments to recommence.
“We know there is much more to do, but the foundational work of our recovery is firmly underway, and we will continue to provide updates as we progress.”
Over the weekend, the government said it would underwrite a £1.5bn five-year loan guarantee to JLR.
The promise came as the head of the influential Business and Trade Committee of MPs wrote to Chancellor Rachel Reeves, warning small firms reliant on JLR, “may have at best a week of cashflow left to support themselves” with “urgent” action needed to support businesses.
JLR was just the latest business to be the subject of a cyberattack.
Harrods, the Co-Op, and Marks and Spencer, are among the companies that’ve struggled in the past year with such attacks.
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