Key facts
- The UK economy grew by 0.1% in May.
- Services sector output increased by 0.3%, while manufacturing contracted by 0.8% and production by 0.5%.
- Science and technology activity rose by 1.8%, driven by research and development.
- The economy had previously contracted by 0.1% in April.
- The Iran conflict at the end of February contributed to rising oil prices.
The UK economy experienced marginal growth of 0.1% in May, narrowly avoiding a contraction and meeting market expectations. This expansion was primarily fueled by a 0.3% increase in the services sector, which compensated for downturns in manufacturing and production. The services sector's strength was attributed to computer programming, advertising, and a robust performance in the pharmaceutical industry. Science and technology also saw significant growth, particularly in research and development.
This follows a 0.1% contraction in April, and comes after a stronger first quarter. The global economy, including the UK, has been impacted by the conflict in Iran, which began at the end of February and led to a surge in oil prices to $120 per barrel. Chancellor Rachel Reeves acknowledged the conflict's domestic economic consequences.
These figures emerge as Chancellor Reeves is expected to be replaced following a potential reshuffle. She recently defended her record on growth and public finances in a speech, warning her successor about the importance of credibility. Potential successors include Energy Secretary Ed Miliband and Home Secretary Shabana Mahmood. The incoming Chancellor will face pressure on public finances, with the OECD forecasting 0.9% growth for the year and projecting government debt to exceed 105.4% of GDP by 2027. The OECD also recommended reforms, including tax consolidation, to boost GDP by up to 4% within a decade.