“UK Economy Shrinks For Second Month In A Row, Contracting 0.1% In May” – ONS.
The UK economy has contracted for the second consecutive month, shrinking by 0.1% in May, according to the Office for National Statistics (ONS). The unexpected decline, which defied economists’ forecasts of a modest 0.1% growth, has intensified pressure on Chancellor Rachel Reeves, who described the figures as “disappointing.” The government, which has prioritised economic growth, now faces growing concerns about the nation’s fragile recovery.
The downturn was driven primarily by a sharp 0.9% drop in production output, with significant declines in oil and gas extraction, car manufacturing, and the volatile pharmaceutical sector. Construction also fell by 0.6%, following a brief uptick in April. While the services sector, which constitutes the bulk of the UK economy, eked out a marginal 0.1% rise—buoyed by strong performances in legal firms and computer programming—retail sales remained notably weak, dragging down overall growth. Liz McKeown, ONS Director of Economic Statistics, noted, “The economy contracted slightly in May with notable falls in production and construction, only partially offset by growth in services. However, across the latest three months as a whole, the economy still grew.”
Despite the monthly contractions, the economy expanded by 0.5% over the March-to-May period, reflecting stronger activity earlier in the year. This growth was largely driven by businesses front-loading exports to the US ahead of President Donald Trump’s tariff increases, which took effect in April, and a surge in home purchases before the expiry of a stamp duty tax break. However, the April and May declines signal a faltering momentum, with analysts warning of a potential contraction in the second quarter. Hailey Low, associate economist at the National Institute of Economic and Social Research, described the growth outlook as “fragile,” highlighting the challenges posed by global trade uncertainties.
Chancellor Reeves reiterated her commitment to revitalising the economy, stating, “I am determined to kickstart economic growth and deliver on that promise.” She pointed to recent policies, including increased investment in city region transport, record funding for affordable homes, and support for major projects like Sizewell C, as steps toward long-term growth. However, critics have been quick to voice concerns. Liberal Democrat Treasury spokesperson Daisy Cooper called the figures a “storm cloud” over businesses and workers, criticising the government’s “jobs tax” and slow progress on reducing trade barriers with Europe. Shadow Chancellor Mel Stride warned of a “ticking tax timebomb,” blaming Labour’s tax rises for stifling growth.
Public sentiment on X reflects growing unease, with users expressing fears of a looming recession and criticising the government’s economic strategy. Some described the contraction as evidence of “leadership failure,” while others noted that the strong 0.7% growth in the first quarter was likely a temporary spike driven by one-off factors.
The Bank of England, which has maintained interest rates at 4.75%, faces a delicate balancing act as inflation creeps toward 3%. While markets anticipate a potential rate cut in August to stimulate borrowing, analysts like Suren Thiru from the Institute of Chartered Accountants in England and Wales suggest that persistent inflationary pressures may delay such moves until later in the year. As global trade tensions and domestic tax pressures mount, the government’s pledge to deliver sustained growth faces a stern test.