The UK economy fell 0.3% as businesses and families struggle with the cost of living

Gross domestic product (GDP) fell by 0.3% in April 2022, after a 0.1% decline in March 2022, the Office for National Statistics (ONS) said in its latest report

Families are feeling the cost of living crisis
Families are feeling the cost of living crisis

The UK economy contracted 0.3% as businesses and families continued to struggle with rising living costs.

Gross domestic product (GDP) fell 0.3% in April 2022, after a 0.1% decline in March 2022, the Office for National Statistics (ONS) said.

The fall in April means the UK economy is just 0.9% larger than it was before the first Covid-19 lockdown in spring 2020.

GDP is a measure of the size and health of the economy.

The ONS said services, manufacturing and construction all fell over the past month – the first time since January 2021 that all major sectors have contributed to a monthly GDP contraction.

Services were down 0.3% due to the winding down of the NHS testing and follow-up service.

Manufacturing shrank 0.6% and construction 0.4% as firms reported being hit by price hikes and supply chain issues.

Darren Morgan, director of economic statistics at the ONS, said: “A sharp contraction in the healthcare sector due to the suspension of the testing and tracing system pushed the UK economy into negative territory in April.

“Manufacturing also suffered from some companies telling us they were being impacted by rising fuel and energy prices.

“These were partially offset by growth in auto sales, which rebounded from a significantly weaker-than-usual March.”

Treasury Shadow Chancellor Rachel Reeves MP called the figures “extremely worrying” for struggling households.

“[They] will increase the concerns families still have about their own finances and the long-term health of our economy,” she said.

The economy’s slowdown comes after the Confederation of British Industry (CBI) warned the government to act now to stop Britain slipping into recession.

A recession is defined as two consecutive quarters—that is, six months in a row—of economic slowdown.

The CBI cut its growth outlook for this year to 3.7% from 5.1% previously and just 1% in 2023 from 3%.

She expects inflation – currently at 9% – to remain high into the autumn, with another peak of 8.7% in October.

The CBI predicts rising costs that will lead to a “historic squeeze” in household incomes, causing families to spend less.

Tony Danker, Director General of the CBI said: “To be clear – we expect the economy to be fairly flat. It doesn’t take much to push us into a recession.

“And even if we don’t, it’s going to feel like that for too many people.

“Times are tough for businesses struggling with rising costs and for those on lower incomes worried about paying bills and getting food on the table.”

The Bank of England warned of a “sharp economic slowdown”.

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https://www.mirror.co.uk/money/breaking-uk-economy-fell-03-27214937 The UK economy fell 0.3% as businesses and families struggle with the cost of living

Fry Electronics Team

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