The UK economy contracted by 0.1% in April, official figures show, with the conflict in the Middle East contributing to the downturn. Rising energy prices and market volatility are expected to further impact growth.
The contraction signals potential headwinds for the UK economy, raising concerns about a broader economic downturn in the second quarter and highlighting the sensitivity of global markets to geopolitical events, particularly in energy supply chains.
The UK economy contracted by 0.1% in April, with official figures indicating that the conflict in the Middle East is beginning to impact growth. This downturn follows a 0.3% expansion in March. Economists had forecast the contraction, with concerns that the economic repercussions of the Middle East conflict will worsen from May onwards.
Rising energy prices, partly due to the closure of the Strait of Hormuz, a key global trade route, are a significant factor. Market volatility, including fluctuations in Brent crude oil prices which briefly exceeded $94 per barrel, has been influenced by geopolitical tensions and statements from US President Donald Trump. Despite this, the FTSE 100 index managed to recover some losses.
Chancellor Rachel Reeves has criticized the conflict's impact, arguing the economy was strong prior to the crisis. Senior economist Ben Caswell of NIESR noted the UK economy's fragile state and predicted the conflict would significantly affect economic activity.