Wet weather leaves Britain’s economic recovery in the doldrums | City & Business | Finance


Britain’s post-recession recovery has stalled, with the economy flat in April, new Office for National Statistics (ONS) data are expected to show on Tuesday.

Economists believe that the ONS will say that April saw no growth due to weakness in the services sector, specifically retail, accommodation and food services segments, due to a mix of extremely poor weather and consumer reluctance to spend.

In March, gross domestic product grew by 0.4 percent, which contributed to first quarter growth of 0.6 percent. That quarter of growth officially took Britain out of the shallow recession that it entered in the second half of last year.

Pantheon Macroeconomics UK chief economist Rob Wood said that even though the washout weather in April is likely to have hurt the economy, maybe even sending it down 0.2 percent month-on-month, it should bounce back in May. He believes that the second quarter will see GDP growth of 0.3 percent.

“Business surveys suggest output growth remains robust,” he said. “Moreover, the GDP recovery from last year’s minor recession has been broad based. An April shower should give way to a brighter summer

However, Gabriella Willis, UK economist at Santander, said: “April is the start of more tepid growth in the second quarter, with growth cooling after a solid first quarter rebound.

“Much has been made of the weather, but for us the continued use of this ‘explanation’ is starting to wear thin, with signs of genuine weakness in demand here rather than merely attributable to the weather.”

Elsewhere, the Resolution Foundation think tank says that whoever forms the next Government needs to raise Britain’s “dire” productivity levels and build on its strengths in services, to boost both growth and living standards.

Over the last 16 years, the size of Britain’s economy has grown 18 percent to £2.3trillion in cash terms. However, the think tank says this growth was powered by a population boom, of which three quarters was accounted for by migration, masking the UK’s poor productivity record. On a GDP per capita or per head, the economy grew by just 4.3 percent, compared to growth of 46 per cent from 1992-2008.

Resolution research director Greg Thwaites said: “The extra six million people in Britain have certainly made the economy bigger but has done little for GDP per capita. In fact, the UK’s record on productivity – which is what really matters for living standards – is exceptionally bad.”



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