UK economy back to growth as it expands faster than expected in May

The UK economy grew quicker than expected in May as more shoppers returned to high streets and construction work recovered, according to official data.

The Office for National Statistics (ONS) said gross domestic product (GDP) increased by 0.4 per cent in May, exceeding predicitions of 0.2 per cent in growth.

It came after no growth was recorded in April, with damp weather hitting consumer spending. ONS director of economic statistics Liz McKeown said: “The economy grew strongly in May, with all the main sectors seeing increases.

“Many retailers and wholesalers had a good month, with both bouncing back from a weak April. Construction grew at its fastest rate in almost a year after recent weakness, with housebuilding and infrastructure projects boosting the industry.”

In April, GDP flatlined after a 0.4 per cent month-on-month rise in March due to wetter weather, according to the Office for National Statistics.

Growth was driven entirely by the services sector, with information and technology and the professional and scientific sectors expanding rapidly.

Between January and March, UK GDP grew by 0.7 per cent. That growth saw the UK economy rebound from a recession in the latter half of 2023.

In June, inflation also fell back to the 2 per cent target for the first time in nearly three years. The Office for National Statistics figures show the Consumer Prices Index (CPI) dropped to 2 per cent in May, down from 2.3 per cent in April.

The new figure marked the first time inflation was at the Bank of England’s target since July 2021, before the cost-of-living crisis saw inflation shoot up – at one stage hitting levels not seen for 40 years.

In the first week since Labour’s election landslide, the chancellor, Rachel Reeves, promised to reboot the economy by making it the new government’s “national mission” to secure the highest sustained growth in the G7.

Ms Reeves said: “Delivering economic growth is our national mission, and we don’t have a minute to waste.

“That is why this week I have already taken the urgent action necessary to fix the foundations of our economy to rebuild Britain and make every part of Britain better off. A decade of national renewal has begun, and we are just getting started.”