Concern grows as UK economy shrinks again

The United Kingdom's economy unexpectedly shrank by 0.3 percent during April, after contracting by 0.1 percent in March, according to the latest figures from the Office for National Statistics, or ONS.

The country's finance minister, Chancellor of the Exchequer Rishi Sunak, played down the second straight month of contraction by saying the UK had been hit by global problems, including the COVID-19 pandemic, the Russia-Ukraine conflict, high energy costs and supply chain shortages, that conspired to push prices up at the fastest rate in 30 years.

"Countries around the world are seeing slowing growth, and the UK is not immune from these challenges," he was quoted by the BBC as saying.

"I want to reassure people, we're fully focused on growing the economy to address the cost of living in the longer term, while supporting families and businesses with the immediate pressures they're facing."

But Rachel Reeves, the UK's shadow chancellor, said: "These figures are extremely worrying and will add to the concern families are still feeling about their own finances and the long-term health of our economy."

Sky News reported that the Confederation of British Industry said the contraction in the economy demands "vital actions" from the government so an inflation-driven recession is avoided.

The ONS said the economic downturn during April was the first time that all major parts of the economy－the service sector, manufacturing and other forms of production－had shrunk at the same time since January 2021.

It was the first time the economy had shrunk for two consecutive months since the start of the pandemic.

Premature talk

However, talk of a recession remains premature because an economy is only deemed to be in recession after two consecutive quarters of economic contraction. The three-month quarter ending on April 30 actually saw growth, albeit of a paltry 0.2 percent.

With the recession still lurking at least six months away, chief economist Paul Dales at consultancy company Capital Economics, told The Guardian: " (Monthly GDP) wasn't as weak as it looks, but it nonetheless increases the chances that the economy is slipping into recession."

Poor performance in April surprised analysts, who had expected growth of 0.1 percent.

The ONS said the sharp and unexpected economic contraction during April was impacted significantly by the end of the National Health Service's test and trace program.

"A big drop in the health sector due to the winding down of the test and trace scheme pushed the UK economy into negative territory in April," Darren Morgan, the ONS' director of economic statistics, said.

The ONS said people also balked at paying higher prices for products in April, and reeled in their spending on travel as well－all factors that dented the UK's gross domestic product.