00:00Well, let's talk now to the international economist, Vicky Price.
00:02Good to see you back on the programme, Vicky.
00:04So, thinking of these April figures, are they a blip or a symptom of a deeper problem?
00:10Well, the truth is that in the UK and probably everywhere else where you do calculate monthly data,
00:15they do move from month to month quite considerably.
00:19So, there is a certain amount of volatility, but there is no doubt that what has been happening,
00:23not just in the UK, but elsewhere too, is that everyone exported to the US to try and avoid the tariffs.
00:30And as a result of that, we're seeing a bit of a comeback in April.
00:34So, the first quarter was strong.
00:36We anticipate that the second quarter is not going to be anything like as strong,
00:40but there are some worrying trends in any case.
00:42One of those is that a lot of the decline that we've seen is in services.
00:46It does suggest that there is a little bit of a lack of confidence.
00:49So, it's not so much the issue of tariffs, but there's been quite an increase in the cost of a number of services in the UK,
00:56which happened in April, which is the beginning of the new financial year.
01:00So, people have reacted slightly negatively to that.
01:03And I think it's a combination of both the, if you like, the return of the economic and more stable environment
01:10after the big push in the first quarter because of the tariffs,
01:13and then the fact that reality has sunk in, that, in fact, there are some issues in the UK economy
01:19which need looking after, and both consumers and businesses are suffering from some of those implications
01:26of particularly some of the tax increases that we saw in the last budget.
01:30Well, let's talk about those issues as you described in the UK economy.
01:33US tariffs are the headline issue, if you like, but how much of these problems are down to domestic policy decisions?
01:40Quite a large number of them, I'm afraid.
01:43What happened is that, as of the beginning of April, we have an increase in the national insurance contributions for employers.
01:50This is a tax that companies have to pay for just hiring people, and that tax has gone up,
01:55and the threshold from where you start has also been lowered, which means that it catches many more people that you employ.
02:02The result is that there are some sections of the economy, and that is in particular the case in the hospitality sector,
02:09where they employ loads of people who don't earn an awful lot, and they have themselves, you know,
02:14suffered as a result of having this extra cost, and employment is not growing anything like as fast as before.
02:22In fact, payroll employment has been going down, and unemployment has started going up in the UK.
02:27So there are loads of domestic issues there.
02:29The government has tried to redress that.
02:31We had a big announcement about spending over the next few years today,
02:35and that spending, particularly on the capital front, is meant to push growth up,
02:40but it will take quite some time for that to have an effect.
02:43So everyone is actually worried about tax increases instead,
02:47which may come again, on top of everything we've seen so far, in the next budget, which will be in the autumn.
02:54Vicky, great to talk to you as always.
02:55Thank you for joining us on the programme.
02:57That's the international economist, Vicky Price.
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