The UK economy expanded by 0.5% in May, dispelling worries of an impending recession.
According to official data, the GDP was performing far better than the analysts’ estimated growth rate of 0.1%.
All three of the economy’s major sectors—services, manufacturing, and construction—saw a recovery.
Additionally, the earlier forecast for a 0.3% decline in April was reduced by 0.1 percentage points.
It was “wonderful,” according to Chancellor Nadhim Zahawi, that UK plc had returned to a positive zone.
The Bank of England is anticipated to take severe steps to contain high inflation, which is predicted to hit 11% by the end of the year, as a result of the better-than-expected performance.
The Bank’s actions regarding interest rates have been restrained due to concern that the economy would enter a recession.
“It’s always wonderful to see the economy expanding, but I’m not complacent,” Mr. Zahawi added.
I am aware that people are worried, therefore we are keeping up our support for families and economic development.
“We’re working with the Bank of England to combat inflation, and I am certain that together, we can build a stronger economy for everyone in the UK,” he said.
The Office for National Statistics’ (ONS) Darren Morgan, head of economic statistics, stated: “The economy recovered in May with growth across all major sectors.”
Despite the end of test and trace and the immunization programs, “health” was the main motivator, with many more individuals visiting their general practitioners.
Additionally, road hauliers experienced a busy month, and travel companies benefited from the pent-up demand for summer vacations.
After several difficult months, “there was widespread expansion across manufacturing,” and “construction fared well with house building and office refurbishment driving development.”
With inflation already at 9.1%, there are worries that consumer spending will decline as households tighten their belts, sending the UK into a recession.
According to the report, consumer-facing service growth shrank by 0.1% in May 2022, driven by a 0.5% decline in retail trade as customers cut back on their spending due to cost concerns.
The production of services increased overall by 0.4% in May, while manufacturing increased by 1.4% and construction increased by 1.5%, representing the seventh consecutive month of growth.
The CBI business group’s head economist, Ben Jones, issued a warning about the volatility of the most recent GDP numbers.
“This is partly because of the effect of the Jubilee bank holidays, and over the following few months, this noise will continue to disguise the true state of the economy,” he said.
In actuality, real-time data and CBI surveys indicate a muted economic pace.
The future prime minister’s top goal should be to restart economic growth.