UK economy felt Iran war fallout in April, data shows
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The UK economy began to feel the fallout from the Iran war in April, according to official data released on Friday. Gross domestic product contracted by 0.3% month-on-month, the first decline since January. The contraction was driven by a sharp drop in manufacturing output and trade disruptions.
The Data
The Office for National Statistics reported that UK GDP fell 0.3% in April from March, missing economists' forecasts of a 0.1% decline. Manufacturing output dropped 1.2%, the largest monthly fall since January 2021, while services output edged down 0.1%. Trade volumes with Middle Eastern partners fell by 15% as shipping routes were disrupted.
Broader Impact
The Bank of England had warned in May that the conflict could shave 0.5 percentage points off GDP growth this year. Consumer confidence slipped to its lowest since November 2023, according to GfK. The pound weakened 0.8% against the dollar on the day of the release.
What's Next
The Bank of England is set to announce its next interest rate decision on June 18. It remains unclear whether policymakers will prioritize supporting growth or curbing inflation, which rose to 3.2% in April.
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UK economy felt Iran war fallout in April, data shows
