UK GDP falls 0.1% in April, raising fears of second-quarter slowdown – Firstpost

Britain’s economy contracted by 0.1 per cent in April, official data showed on Friday, underscoring growing concerns that the country’s economic recovery is losing momentum amid rising energy costs and disruptions linked to the Iran conflict.

The decline in gross domestic product (GDP) matched economists’ expectations. Analysts polled by Reuters had forecast a 0.1 per cent month-on-month contraction following stronger growth earlier in the year.

According to the Office for National Statistics (ONS), the April contraction followed a 0.3 per cent expansion in March and 0.4 per cent growth in February, suggesting the economy entered the second quarter on a weaker footing after a robust first-quarter performance.

The latest figures are likely to fuel fears that the UK economy could shrink in the April-June quarter, complicating the government’s efforts to sustain growth amid heightened geopolitical uncertainty.

Services sector drags growth

The services sector, which accounts for the bulk of Britain’s economic output, contracted by 0.2 per cent in April and was the primary driver behind the overall decline. Construction activity rose 0.1 per cent during the month, partially offsetting the weakness, while production output remained flat.

One of the sharpest declines was recorded in sports, amusement and recreation activities, where output fell 9.1 per cent. The ONS said the industry made the largest negative contribution to both services output and overall GDP growth during the month.

The statistics agency attributed part of the decline to the cancellation of sporting events in West Asia following the outbreak of conflict involving Iran, which affected UK-based companies operating in the sector.

Iran conflict pushes up costs

Businesses across several industries reported that the conflict in West Asia had hurt trading conditions and reduced revenues.

Companies in manufacturing, wholesale trade, transportation support services and travel agencies told the ONS that geopolitical tensions had weighed on turnover during April.

The agency said a common concern raised by businesses was the rise in energy and fuel prices stemming from the conflict.

“A common theme of the comments received was the increase in prices because of the Middle East conflict,” the ONS said. “These comments were mainly for energy and fuel costs, with some suggesting an impact seen in April 2026 and also suggesting an impact for future months.”

Energy markets have been rattled by disruptions to shipping through the Strait of Hormuz, a critical route for global oil and gas supplies, resulting in higher fuel costs for businesses and consumers.

Pressure on Reeves

The weaker-than-expected economic backdrop poses a challenge for Chancellor Rachel Reeves, who has argued that Britain entered the current crisis from a position of strength after a solid first quarter.

Reeves has also criticised US President Donald Trump’s handling of the crisis, arguing that Washington’s actions contributed to greater instability and uncertainty for businesses.

While the April contraction was modest, economists said the figures point to a fragile outlook as households and companies grapple with higher costs and geopolitical risks.

With inflationary pressures re-emerging through rising energy prices and business confidence showing signs of strain, investors and policymakers will closely watch upcoming economic data for evidence of whether the slowdown deepens in the months ahead.

The April GDP figures suggest that the fallout from the Iran conflict is already being felt across the British economy, raising the risk that growth could weaken further during the second quarter.