The UK economy is expected to contract despite a boost at the start of the year, with economists warning that the war in Iran\u2019s energy price shock will now show up in fresh data.\u00a0<\/p>\n
Economists believe that the UK economy declined<\/a> by 0.1 per cent in April. Official figures will be published on Friday.\u00a0<\/p>\n The drop in growth momentum will reflect the late impact of the war in Iran on businesses and consumers, City analysts have said, as political uncertainty around the Labour Party\u2019s leadership could also dampen activity<\/a>.\u00a0<\/p>\n Deutsche Bank\u2019s Sanjay Raja said production and spending would \u201cremain subdued as the energy shock catches up with households and businesses\u201d, adding that there would be \u201csome course correction\u201d on growth across the country.<\/p>\n He added his projection of a small decline in the UK economy could be more optimistic, as firms may pull back on spending by more than expected.\u00a0<\/p>\n Raja said that official figures last month showing a fall in retail sales by 0.4 per cent would weigh on growth, while the services sector is also likely to decline after a \u201cresounding start to the year\u201d.\u00a0<\/p>\n Deutsche Bank added that strikes across the London Underground and some rainier weather would have also dampened activity.\u00a0<\/p>\n A note by Pantheon Macroeconomics said that the health sector could also decline due to doctor strikes in April. Scheduled resident doctor strikes taking place in June present \u201canother downside risk\u201d to growth forecasts.\u00a0<\/p>\n Capital Economics analysts said that growth of 0.6 per cent in the first quarter of the year would unwind as firms would stop stockpiling in anticipation of further disruption due to halted trade across the Strait of Hormuz.\u00a0<\/a><\/p>\n Some analysts pencilled in a larger decline in growth due to weaknesses across the retail and communication sectors.\u00a0<\/p>\n Reeves relies on AI adoption across British economy<\/p>\n Business groups<\/a> have now put more pressure on Rachel Reeves to fast-track growth policies as questions linger over her future as Chancellor due to Andy Burnham\u2019s possible leadership bid.\u00a0<\/p>\n Reeves said in a speech on Tuesday that she would look to roll out AI adoption to boost productivity and grow business, making it one of the key economic levers relied on by the Chancellor to improve her political fortunes.\u00a0<\/p>\n An AI adoption plan report published alongside the speech showed that a lack of skills and unclear regulations were the biggest barriers to taking on the technology.\u00a0<\/p>\n A government review proposed pooling AI data and providing training for entry-level AI roles.\u00a0<\/p>\n Businesses including HSBC, Rolls-Royce, Revolut, and Linklaters are set to provide data on AI adoption to an institute tasked with overseeing economic policy relating to the technology.<\/p>\n