UK economy shrinks 0.1% in April as services weaken

The UK economy contracted by 0.1% in April, according to official data released on Friday. The fall was driven by weaker output in the services sector, while construction partly offset the decline. Analysts had expected a small contraction, after stronger-than-expected growth in March.

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The Office for National Statistics said the economy grew by 0.7% in the three months to April compared with the previous three-month period. That suggests the monthly fall did not fully reverse the broader improvement seen over the quarter. The same data also showed the economy grew by 0.3% in the month, confounding forecasts of a small contraction, highlighting how volatile monthly readings can be.

The figures matter because UK growth affects tax receipts, public borrowing and pay trends, as well as expectations for interest rates and inflation. The release comes as inflation concerns remain in focus, with the outlook shaped in part by war-related pressures mentioned in the data. The Bank of England has a 2% inflation target, and the latest forecast cited in the material upgraded 2026 growth from 0.8% to 1%.

The services sector is the largest part of the UK economy, so weakness there can have a wider effect on overall growth. Construction, by contrast, provided some support in April, but not enough to prevent a monthly contraction. The contrast between the monthly fall and the stronger three-month figure underlines the uneven pace of the recovery.

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The data also follows a March period in which people brought forward spending because of concerns about the war in the Middle East, which had helped lift activity. That makes April's decline harder to read as a simple trend, since some of the earlier strength may have reflected timing effects rather than sustained demand. For policymakers, the balance between slower growth and inflation pressure remains important.

What remains unclear is whether April marks a temporary pause or the start of a weaker run of activity. The next key point to watch will be whether services output stabilises in the coming months and whether inflation pressures ease or intensify. Further official releases will help show whether the quarterly improvement can be maintained.

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