UK bounces back into growth after jump in spending at bars, pubs and shops

Britain’s economy bounced back in April after stronger spending in pubs, bars and shops.

Official figures showed gross domestic product was up by 0.2 percent after a 0.3 percent in March. 

But the increased consumer spending fuelled fears of another rise in interest rates to help control inflation.

Chancellor Jeremy Hunt said: “In the end there is no alternative to bringing down inflation, if we want to see consumers spending, if we want to see businesses investing, if we want to see long-term growth and prosperity.”

Hospitality helped fuel a one percent increase in growth for consumer-facing services as people spent more on drinking and eating out, according to the Office for National Statistics.

Overall, the services industry grew by 0.3 percent for the month after 0.5 percent decline in March.

ONS director of economic statistics Darren Morgan said: “GDP bounced back after a weak March.

“Bars and pubs had a comparatively strong April, while car sales rebounded and education partially recovered from the effect of the previous month’s strikes.”

House-builders and estate agents recorded weak performance after continuing hikes in interest rates, which have lifted to a 14-year-high of 4.5 percent and are expected to keep rising.

Higher than expected wage rises in figures released earlier this week also stoked further fears the Bank of England’s monetary policy committee will increase interest rates again next week.

Downing Street said the Government was “conscious about the potential for a wage-price spiral” and that’s why “difficult decisions” were being made about public sector pay.

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The Prime Minister’s official spokesman said: “We know we can’t have high growth with high inflation, that’s why halving inflation is one of the Prime Minister’s key priorities.

“We are working with the Bank of England to drive that down – they are ultimately responsible for setting interest rates.”

Kitty Ussher, chief economist at the Institute of Directors, said: “April’s GDP data shows a recovery in consumer-facing services compared to March, with growth recorded in retail and wholesale trade, accommodation, food and beverage services, and transport.

“This suggests that households responded to the improving weather in April by raising their levels of discretionary spending – even in the face of rising costs.

Ruth Gregory, deputy chief UK economist at Capital Economics, told clients: “The 0.2 percent rise in GDP in April will further raise hopes that the economy will escape a recession this year. 

“But the rise … is not as good as it seems. And with the full drag from high interest rates yet to be felt, it is too soon to sound the all clear.”

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