UK Economy Contracted in April as Services Activity Fell.

A 0.2% contraction in services activity was cited as the main driver of negative growth, with officials saying it had been partly offset by a 0.1% rise in construction output. Production output showed zero growth for the month. As energy prices rose as a result of the conflict, after Iran closed the Strait of Hormuz — a vital shipping route for global trade — the UK’s strong expansion in the first quarter slid into reverse. The Office for National Statistics (ONS) said this was the largest negative contribution from a single industry to both services output and real GDP growth.

The fall in gross domestic product in April, which had been expected by economists, followed a 0.3% increase in March, according to the Office for National Statistics (ONS). Economists polled by Reuters had expected the British economy to contract by 0.1% month-on-month. The data will underline fears that the UK economy will contract in the second quarter of the year. Over the three months to April — a longer-term perspective that tends to be less volatile — GDP growth was 0.7%, the ONS said. Most forecasters have significantly downgraded their expectations for leading economies this year, including the UK, as higher oil prices resulting from the Middle East conflict drive up inflation and hit growth.