Wet weather dampens Sunak’s economic recovery – but it’s likely to be a passing shower

From “going gangbusters” to skidding on a wet road, Rishi Sunak’s economic recovery has been dampened by Britain’s record-breaking soggy spring.

The unexpected vim shown by UK plc earlier this year vanished during April, for which early estimates of GDP growth released by the Office for National Statistics (ONS) are dead-on zero.

What went wrong? A lot of it was down to bad weather, which halted many parts of the economy and saw construction decline by 1.4 per cent. Manufacturing was also mired in the red – production posted a 0.9 per cent decline – erasing the modest growth in the services sector.

April’s poor numbers did not come as a surprise, having been predicted by the Reuters poll of City economists. So score one for the forecasters, for a change.

However, after the economy expanded by a surprisingly strong 0.6 per cent in the first part of the year, it can’t be seen as anything other than a disappointment.

Adding to the gloom was a second profit warning from DFS, the furniture retailer. The consumer is not in a happy place. Retail sales figures for April showed a 2.3 per cent fall following a 0.2 per cent fall (revised down by the ONS) in March. This consumer-facing services sector recorded a 0.7 per cent decline, a notable blackspot within the UK’s dominant economic sector. The majority of its components delivered a positive contribution.

But while all this looks grim, it probably represents more of a passing shower than a total absence of summer.

Long term, UK plc has some deep problems. Labour shortages, skills gaps dragging down key sectors, and a lack of investment in particular. Slow growth is the result, which is exactly what you don’t want when you have an ageing population to support. Britain’s competing politicians haven’t had much good to say about these problems. Whoever wins the election is going to have to wake up, fast.

But the economy should rebound from its soggy April. Euro 2024 is fast approaching, which should provide a boost for the hard-pressed hospitality sector. A lively pub looks a better bet than a backyard barbeque if the unseasonal chill continues.

The consumer sector has been struggling but there are grounds for some limited optimism beyond the football. Wages are outpacing inflation and by a fair margin, which should translate into higher spending, especially if the labour market settles down and confidence improves.

Some comfort can also be drawn from what drove the service sector’s positive numbers; the information and communication subsection recorded growth of 2.3 per cent in the month, driven by a 3.2 per cent rise in computer programming, consultancy and related activities. Telecoms delivered 1.7 per cent, publishing activities 4.9 per cent. Those are areas which one wants to see doing well. If this overall assessment is correct and growth indeed returns, a new government may enjoy a modest economic honeymoon. A summer interest rate cut – or, more likely, early autumn – would help no end; that is still on the cards as long as there are no nasty surprises caused by inflation.

April’s result represents bad timing for Mr Sunak rather than the return of last year’s recessionary gloom. Of course, the numbers could ultimately be revised up but it will be too late for the prime minister. His Tory opponents would say he’s only got himself to blame over the election date.