UK’s economy shrinks in April as Middle East war hits

LONDON: Britain’s economy contracted in April as the Middle East war hit growth, official data showed today, dealing a setback to Prime Minister Keir Starmer as he grapples with a political crisis.

Gross domestic product (GDP) fell 0.1% in April following growth of 0.3% in March, the Office for National Statistics said in a statement.

The reading matched analysts’ expectations and followed a stronger-than-expected performance in the first quarter.

Surging energy prices triggered by the war, which began with US-Israeli strikes on Iran on Feb 28, have reignited inflationary pressures and threatened to derail growth.

“Before the conflict in the Middle East, growth was higher than expected and inflation was falling,” finance minister Rachel Reeves said in response to the figures.

“This is not a war we wanted or joined, but one that will have an impact at home,” she said.

The weak economic showing dealt a fresh blow to Starmer, who is facing calls to step down.

Britain’s defence and armed forces ministers quit Thursday in a row over military spending, further weakening Starmer’s authority just a week before a by-election that could prompt a bid to replace him.

Defence Secretary John Healey resigned warning that Starmer’s long-awaited Defence Investment Plan for funding over the next decade – which the leader has yet to publish -risked making Britain “less safe”.

“The effects of the conflict in the Middle East are now well and truly showing up in the economic data, and it isn’t pretty reading for the UK,” said Stuart Clark, portfolio manager at Quilter.

“We expect the economy to continue to fade as the year goes on, and particularly for as long as there is no lasting peace deal in the Middle East,” he added.