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UK economy grows in April but house market weakens UK economy grows in April but house market weakens
(32 minutes later)
The UK economy grew marginally in April helped by strong trade in bars and pubs but housebuilders and estate agents had a "poor month", official figures show.The UK economy grew marginally in April helped by strong trade in bars and pubs but housebuilders and estate agents had a "poor month", official figures show.
The economy grew by 0.2% in April after shrinking in March, the Office for National Statistics (ONS) said.The economy grew by 0.2% in April after shrinking in March, the Office for National Statistics (ONS) said.
But the ONS said the construction sector had faltered as rising interest rates and mortgage costs made house buyers more cautious.But the ONS said the construction sector had faltered as rising interest rates and mortgage costs made house buyers more cautious.
One housebuilder told the BBC people were "holding back" on buying homes.One housebuilder told the BBC people were "holding back" on buying homes.
The Bank of England has been raising interest rates to calm the rate at which prices are rising - which is known as inflation and currently stands at 8.7%.The Bank of England has been raising interest rates to calm the rate at which prices are rising - which is known as inflation and currently stands at 8.7%.
As interest rates have risen and more people are coming to the end of fixed-rate mortgage deals, some lenders have been withdrawing certain mortgages from the market.As interest rates have risen and more people are coming to the end of fixed-rate mortgage deals, some lenders have been withdrawing certain mortgages from the market.
First-time buyers are being met with higher rates, leaving some priced out, and renters are also facing higher costs due to landlords selling up.First-time buyers are being met with higher rates, leaving some priced out, and renters are also facing higher costs due to landlords selling up.
Ian Burns, who runs Cameron Homes in Staffordshire, said people were being "very cautious" and were "taking longer to make decisions".Ian Burns, who runs Cameron Homes in Staffordshire, said people were being "very cautious" and were "taking longer to make decisions".
"Over the past three or four weeks, we've seen a slowdown in reservations and ultimately, if that doesn't pick up, then we have to slow down the build operation," he told BBC Wake up to Money."Over the past three or four weeks, we've seen a slowdown in reservations and ultimately, if that doesn't pick up, then we have to slow down the build operation," he told BBC Wake up to Money.
"We can't just continue to build houses if we don't have customers for them.""We can't just continue to build houses if we don't have customers for them."
Guy Gittins, chief executive of Foxtons estate agents in London, said the "power balance" between buyers and sellers had "shifted". He said this meant "serious sellers had to get a little bit more competitive with pricing".Guy Gittins, chief executive of Foxtons estate agents in London, said the "power balance" between buyers and sellers had "shifted". He said this meant "serious sellers had to get a little bit more competitive with pricing".
The Bank of England is widely expected to lift interest rates again when its Monetary Policy Committee meets next week. It had been predicted to increase borrowing costs from 4.5% to 4.75%.The Bank of England is widely expected to lift interest rates again when its Monetary Policy Committee meets next week. It had been predicted to increase borrowing costs from 4.5% to 4.75%.
However, following stronger than expected wage growth in the three months to April - which, it is feared, will keep inflation higher for longer - the Bank's benchmark rate now expected to peak at 5.5%.However, following stronger than expected wage growth in the three months to April - which, it is feared, will keep inflation higher for longer - the Bank's benchmark rate now expected to peak at 5.5%.
With rates rising, lenders have been withdrawing some mortgage products with hardly any notice.With rates rising, lenders have been withdrawing some mortgage products with hardly any notice.
Five reasons why mortgages are getting us downFive reasons why mortgages are getting us down
Chancellor Jeremy Hunt welcomed Wednesday's figures from the ONS but warned that the UK needed to tackle inflation to "protect family budgets". For the three months to April, the UK economy grew only marginally by 0.1%.
Yael Selfin, chief economist at accountancy firm KPMG UK. said "major challenges" remained for the UK economy.
She added it was likely the Bank of England would continue its rate hiking cycle "putting further pressure on both households and businesses as they face higher borrowing costs".
Chancellor Jeremy Hunt said the UK still had a "big issue" with rising prices, stating inflation was "the number one challenge we face".
In response to whether he was following the dictum of John Major, who as Chancellor in 1989 said "if it isn't hurting, it isn't working", Mr 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.
"And that's why we'll be unstinting in our support for the Bank of England as they go about their job to bring down inflation."
Labour's Shadow Chancellor Rachel Reeves said the figures represented "another day in the dismal low growth record book of this Conservative government".Labour's Shadow Chancellor Rachel Reeves said the figures represented "another day in the dismal low growth record book of this Conservative government".
"The facts remain that families are feeling worse off, facing a soaring Tory mortgage penalty and we're lagging behind on the global stage.""The facts remain that families are feeling worse off, facing a soaring Tory mortgage penalty and we're lagging behind on the global stage."
For the three months to April, the economy grew by 0.1%.
Related TopicsRelated Topics
GDPGDP
Economic growthEconomic growth
UK economyUK economy
Office for National StatisticsOffice for National Statistics