UK Economy Rebounds More Slowly Than Expected In MayNeil Hardie
The UK’s economy rebounded more slowly than expected in May, growing just 1.8% from the previous month, as the gradual easing of lockdown had a modest impact.
Manufacturing and house building showed signs of recovery in May as some firms saw staff return to work. But the Office for National Statistics said the economy was “in the doldrums”.
As a result of big contractions in previous months, the UK economy is now 24.5% smaller than it was in February, the ONS added.
The return to economic growth in May was described as “disappointing” by economists, who had expected an expansion of 5% or more. The increase came after a fall of 6.9% in March and a record 20.4% decline in April.
In the three months to May, the economy shrank by 19.1% compared with the previous three-month period, the ONS said.
“The economy was still a quarter smaller in May than in February, before the full effects of the pandemic struck,” said Jonathan Athow, deputy national statistician for economic statistics at the ONS.
“In the important services sector, we saw some pick-up in retail, which saw record online sales. However, with lockdown restrictions remaining in place, many other services remained in the doldrums, with a number of areas seeing further declines.”
The new statistics came as the Office for Budget Responsibility warned that the UK economy may not recover until the end of 2022 while government borrowing is expected to surge to £322bn this year in response to the pandemic.
Publishing its annual fiscal risks report as ministers relax coronavirus lockdown restrictions to reboot the economy, the OBR said it expected unemployment would rise sharply as the government winds down its furlough wage subsidy scheme.
At least 10% and as much as a 20% of the 9.4m jobs furloughed on the scheme will be made redundant, it said, as state subsidies are reduced from the start of August and removed entirely by the end of October.