MONEY TALKS
UK economy flatlines after wet weather hits spending – what it means for your money
We explain how you can protect your finances
THE UK economy flatlined in April, official figures show.
Gross Domestic Product (GDP) was flat - 0.0% growth - during the month, following growth of 0.4% in March, according to the Office for National Statistics (ONS).
1
Today's figures mean the economy isn't growing or shrinking.
GDP is a measure of the economic output of companies, individuals and governments.
It's also a measure of how healthy and prosperous an economy is.
Economists had predicted that GDP would be flat in April, held down by weaker-than-usual retail sales over the Easter period.
READ MORE IN MONEY
Lindsay James, investment strategist at Quilter Investors, said the wet weather can also be thanked for the stall in growth.
She said: "Persistent rain has kept consumers from spending and caused economic growth to grind to a halt for the month with no growth registered.
"With rainfall in April 55% higher than average and the wettest April since 2012, it is perhaps no surprise to see the economy struggle as a result, with sectors such as retail, construction and pubs all severely impacted."
It comes after the economy grew by an estimated 0.6% in the first quarter of 2024, pulling the UK out of a small recession at the end of last year.
Most read in Money
A healthy economy is one where GDP is growing but if it stalls or is falling, it's bad news for businesses and consumers.
Luke Bartholomew, deputy chief economist at asset management giant abrdn, said monthly GDP data can be volatile, and that it is “important not to put too much stead in just one month of data and look at the broader trend across several months".
What are the different types of pensions?
He added: "And on that measure, a picture of solid recovery from last year’s recession emerges. This should continue as the year progresses as households benefit from strong real income growth amid falling inflation."
Services output grew by 0.2% in April, the fourth consecutive month of growth, while production output fell by 0.9% in April following growth of 0.2% in March.
Construction output fell by 1.4% in April, its third consecutive monthly fall, and was down by 2.2% in the three months to April.
The figures may present a headache for Prime Minister Rishi Sunak, who has pegged much of his General Election campaign on a recent record of economic improvement under his Conservative government.
A Conservative Party spokesman said: "There is more to do, but the economy is turning a corner and inflation is back down to normal.
"This election is choice. Under the Conservatives, we can keep the economy growing with our clear plan to cut taxes on work, homes and pensions, or we can risk all that progress with Labour’s £2,094 of tax rises on every working family.”
Labour has rejected the Conservatives’ claim that it is planning the claimed tax rises over the course of the next Parliament.
What it means for your money
The latest figures show that the ongoing challenges linked to the cost of living challenges show no signs of going just yet away yet.
A healthy economy usually means lower inflation, rising employment, less poverty, and more money in your pocket.
The consumer Prices Index (CPI) inflation stood at 2.3% in April, the lowest level in almost three years.
Lower inflation is good because it means prices don't rise as fast, putting less financial pressure on households.
But figures released yesterday revealed that the number of people not working due to long-term illness has reached the highest level on record.
Official figures rose by 55,000 to 2.83million in the three months to April.
This has led some experts to warn household budgets are still under immense pressure.
Alice Haine, personal finance analyst at Bestinvest, said: "Personal budgets have been battered by higher household costs over the past couple of years so even those enjoying some respite from easing inflation, falling energy prices and a rising pay packet are unlikely to be willing to splash the cash just yet."
Today's figure could also give the Bank of England little reason to lower interest rates, with the decision to come on June 20.
Interest rates currently remain at a 16-year high of 5.25%.
Suren Thiru, ICAEW Economics Director, said: "A June interest rate cut looks improbable with the Bank of England likely to be a little wary of shifting policy in the middle of a general election campaign."
Are you missing out on benefits?
YOU can use a benefits calculator to help check that you are not missing out on money you are entitled to
Charity works out what you could get.
Entitledto's determines whether you qualify for various benefits, tax credit and Universal Credit.
MoneySavingExpert.com and charity StepChange both have benefits tools powered by Entitledto's data.
You can use to determine which benefits you could receive and how much cash you'll have left over each month after paying for housing costs.
Your exact entitlement will only be clear when you make a claim, but calculators can indicate what you might be eligible for.
How to protect your finances
There are ways you can keep your cash safe if you're worried about the UK's economic outlook.
Make sure you go through all your bank statements and accounts so you know what your income and outgoings are every month.
Of course, there are bills that you can't avoid paying - but that doesn't mean you can't cut back in other ways.
For example, you can save money by moving to a cheaper mobile phone tariff or by axing subscriptions you don't need like Netflix or Amazon Prime.
If you've got any outstanding debts, the worst thing to do is ignore them as it will only make your financial situation worse.
Stay on top of what you owe and always repay priority debts.
There are also plenty of organisations where you can seek debt advice for free.
These include:
- National Debtline - 0808 808 4000
- Step Change - 0800 138 1111
- Citizens Advice - 0808 800 9060
You should also check what benefits you are eligible for as you might be able to claim without realising.
Entitledto's free calculator works out whether you qualify for various benefits, tax credits and Universal Credit.
If you don't want to register, consumer group moneysavingexpert.com and charity StepChange both have benefits tools powered by Entitledto's data that let you save your results without logging in.
There is also emergency funding available for struggling households, which is dished out by local councils.
The Household Support Fund is designed to help those on a low income or benefits cover the cost of food, energy and general living costs.
What help is available varies depending on where you live as each council sets it own eligibility criteria.
READ MORE SUN STORIES
It's worth getting in touch with your local authority to see what you might be able to get.
You can find what council area you fall under by using the government's council locator tool online.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected].
Plus, you can join our Facebook group to share your tips and stories
Topics