Key facts
- UK economy grew 0.1% in May, meeting forecasts.
- Services sector expanded by 0.3%, offsetting declines in manufacturing and production.
- The growth follows a 0.1% contraction in April.
- The conflict in the Middle East has contributed to rising oil prices and supply chain disruptions.
- The OECD forecasts 0.9% growth for the UK this year and projects debt to exceed 105.4% of GDP by 2027.
Britain's economy expanded by a modest 0.1% in May, narrowly avoiding a contraction and meeting economists' forecasts. This expansion was primarily driven by a 0.3% increase in the services sector, which compensated for downturns in manufacturing and production. Computer programming, advertising, and the pharmaceutical industry were highlighted as key contributors to services growth.
This follows a 0.1% contraction in April, and comes after a stronger first quarter. The conflict in the Middle East has impacted global economies by pushing up oil prices to a peak of $120 per barrel and disrupting supply chains. The Office for National Statistics noted that firms across various sectors, including manufacturing, hospitality, and travel, flagged the conflict as affecting their activity.
Analysts described the economy as remaining 'fragile,' with rising energy prices posing a risk to the growth outlook. The incoming Prime Minister, Andy Burnham, faces the challenge of boosting economic growth. The OECD forecasts 0.9% growth for the UK this year and projects government debt to exceed 105.4% of GDP by 2027 if current policies continue. The OECD also recommended reforms to potentially boost GDP by 4% within a decade.
Chancellor Rachel Reeves' tenure has been criticized by the opposition for failing to stimulate growth, with accusations that higher taxes have choked the economy.