Disappointing industrial output shows scale of challenge for new government


The scale of the economic challenge for whoever forms a new government has been laid bare after official data showed Britain's industrial output again fell short of expectations.

Figures from the Office for National Statistics (ONS) showed industrial output grew just 0.2% in April, below consensus forecasts of 0.7%

Output was down 0.8% year on year and the poor performance, which follows three consecutive months of falling figures, was put down to lacklustre manufacturing growth, which grew by only 0.2%.

Stronger energy production and factory output failed to make up for the sluggish manufacturing figures, which also missed forecasts and were flat year on year.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "April's modest rise in industrial production reverses only a tiny fraction of the 1.8% fall between December and March and so will increase concerns that the overall economy is stagnating."

Construction output also fell month-on-month in April, the ONS said, dropping 1.6% month on month, driven by falls in both repair and maintenance and new work.

The figures point to a further slowdown in momentum for the UK economy following the country's decision to quit the EU last year and come amid political turmoil after the shock General Election result.

"Looking ahead, we expect manufacturing output to revive slowly, as moderate growth in exports offsets weakness in domestic demand. Even so, industrial production is on track to barely rise at all again in Q2, ensuring that overall GDP growth struggles to better Q1's 0.2% rise," Mr Tombs added.

In slightly better news, ONS data also showed that the UK's overall trade deficit narrowed in April, standing at £2.1 billion versus £3.9 billion the previous month.

Mr Tombs said the UK's trade position has shown "no underlying improvement", despite the collapse in the pound providing a supposed boost for exporters.

"Britain won't enjoy a trade boost until exporters reduce margins and seek greater market share instead," he said.