What’s worse is that the UK economy shrank by an unexpected 0.1% in May, the second month in a row that GDP contracted. This drop is a shock to most analysts who were expecting modest growth over this time. The Office for National Statistics (ONS) just published new provisional figures today. Measures of economic output, which are showing a worrying dip overall with the Great Resignation, jeopardize our national economic health.
Even with the overall contraction, the services sector was able to show some growth during the month of May. Significantly, legal practices saw a recovery from last month’s struggles with increased workload following changes in stamp duty thresholds. This mixed performance underscores a growing, stark divide in our economy. Not all communities are falling behind—many are pivoting and bouncing back stronger.
In the quarter ending in May, the economy grew by 0.5%. This growth has come from services. This increase indicates that even with some of these short-term dips, there are areas with clear promise to bounce back. Yet, the latest economic data suggests that challenges still remain in important industries, especially in manufacturing and retail.
Ben Jones, the lead economist at the CBI business group, commented on the weak figures for May, stating, “This highlights the ongoing pressures facing the UK economy, with manufacturing and retail struggling, alongside a patchy performance across other parts of the services sector.” His comments the road that still lies before us on the economic recovery.
Chancellor Rachel Reeves has a daunting task ahead of her with such the chronic underperformance of our economy. With this tremendous power, she’s in charge of all economic policy for the UK government. Her administration has made increasing economic opportunity a central focus. Sadly, the new numbers deliver a blow to this work.