UK GDP report to show if economy returned to growth in May – business live
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Newsflash: The UK economy has shrunk for the second month running, in a blow for chancellor Rachel Reeves.
UK GDP contracted by 0.1% in May, new data from the Office for National Statistics shows, rather weaker than the 0.1% growth expected.
The fall follows a 0.3% drop in GDP in April, and growth of 0.4% in March (revised up from +0.2%).
May’s contraction was driven by a slump in industrial production, and construction work.
The ONS reports:
Monthly services output grew by 0.1% in May 2025, following a fall of 0.3% in April 2025 (revised up from a 0.4% fall in our previous publication), and grew by 0.4% in the three months to May 2025.
Production output fell by 0.9% in May 2025, following an unrevised fall of 0.6% in April 2025, but grew by 0.2% in the three months to May 2025.
Construction output fell by 0.6% in May 2025, following growth of 0.8% in April 2025 (revised down from 0.9% growth in our previous publication), but grew by 1.2% in the three months to May 2025.
ONS director of economic statistics Liz McKeown points out that the UK economy still grew over the March-May quarter:
“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. This reflected strength earlier in the year that resulted, in part, from some activity being brought forward to February and March.
“May’s fall in production was driven by oil and gas extraction, car manufacturing and the often-erratic pharmaceutical industry.
“While services grew overall in May with a strong month for legal firms, which recovered from a weak April, and computer programming, these were partially offset by a very weak month for retail sales.”
Photograph: ONS
Newsflash: The UK economy has shrunk for the second month running, in a blow for chancellor Rachel Reeves.
UK GDP contracted by 0.1% in May, new data from the Office for National Statistics shows, rather weaker than the 0.1% growth expected.
The fall follows a 0.3% drop in GDP in April, and growth of 0.4% in March (revised up from +0.2%).
May’s contraction was driven by a slump in industrial production, and construction work.
The ONS reports:
Monthly services output grew by 0.1% in May 2025, following a fall of 0.3% in April 2025 (revised up from a 0.4% fall in our previous publication), and grew by 0.4% in the three months to May 2025.
Production output fell by 0.9% in May 2025, following an unrevised fall of 0.6% in April 2025, but grew by 0.2% in the three months to May 2025.
Construction output fell by 0.6% in May 2025, following growth of 0.8% in April 2025 (revised down from 0.9% growth in our previous publication), but grew by 1.2% in the three months to May 2025.
Overnight, Donald Trump’s trade war has taken another twist.
The US president has announced his will impose a 35% tariff on imports from Canada next month and threatened to impose blanket tariffs of 15% or 20% on most other trade partners.
In a letter released on his social media platform, Trump told Mark Carney, the Canadian prime minister, the new rate would go into effect on 1 August and would increase if Canada retaliated.
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
We’re about to discover how the UK economy fared in May, the month in which Britain became the first country this year to agree a trade deal with Donald Trump.
The government will be hoping for signs that activity picked up in May, given the push for growth. The data is due at 7am UK time.
Victoria Scholar, head of investment at interactive investor, says:
April’s decline was caused by a drop in legal activities linked to the stamp duty increase. Plus, higher energy bills, the National Insurance increase and tariff uncertainty took their toll.
After an unfortunately timed cluster of headwinds in April, it appears as though the only way is up. Consumer sentiment is already showing signs of improvement and Friday’s GDP data could add to the cheerier mood, with the potential for a rebound in activity, particularly in the key services sector. Plus, anticipation of easier monetary policy is helping to boost sentiment and the real economy. The Bank of England lowered interest rates in May with the market anticipating two more cuts this year.”
