April saw a 0.3% decline in UK GDP, largely attributed to the unwinding of the previous quarter's manufacturing boost intended to avoid US tariffs. Additionally, sectors like legal services and real estate reflected a pullback after preemptive activity related to stamp duty changes. Rising staffing costs and household expenses significantly impacted consumer and business confidence. While there are indications that May may improve, challenges like job losses, slow wage growth, and rising inflation threaten overall spending power. Consequently, growth for the second quarter is expected to approach zero, with government policies also contributing to this stagnation.
The contraction was partly due to the unwinding of the temporary boost in the first quarter, when manufacturers had brought activity forward to beat US tariffs.
Some surveys suggest May might be less bad, especially with fears of a global trade war now receding. However, job losses appear to be accelerating, wage growth is slowing, and inflation has jumped.
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