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The UK economy returned to modest growth in May, expanding by 0.1% despite heightened geopolitical tensions in the Middle East that pushed up energy prices and weighed on business activity.
According to the latest figures from the Office for National Statistics (ONS), gross domestic product (GDP) increased by 0.1% in May after contracting by the same amount in April, matching economists’ expectations and suggesting the economy has remained more resilient than many analysts had anticipated.
Growth was driven primarily by the services sector, which rose by 0.3% during the month. However, weaker performance in other industries limited the overall expansion. Production output, including manufacturing, declined by 0.5%, while construction activity fell 0.8%, reflecting the impact of higher costs and continued economic uncertainty.
One of the strongest-performing industries was scientific research and development, where output surged 5.1%, making it the biggest contributor to May’s economic growth.
Looking at the broader picture, the UK economy expanded by 0.7% over the three months to May. Although this represents solid growth, it was slightly slower than the 0.8% recorded during the previous three-month period ending in April.
Liz McKeown, Director of Economic Statistics at the ONS, said the economy continued to show strength over the three-month period, though momentum had weakened in the latest monthly figures.
Despite the return to growth, economists remain cautious about the UK's economic outlook. Many believe overall GDP could remain largely flat during the second quarter of the year, with recent geopolitical events continuing to create uncertainty.
Suren Thiru, Chief Economist at the Institute of Chartered Accountants in England and Wales (ICAEW), said the modest recovery was unlikely to ease concerns over the country's economic health. He noted that the conflict involving Iran had affected key sectors such as construction and manufacturing, although warmer weather provided a boost to retail spending.
The latest figures arrive as Chancellor Rachel Reeves prepares to leave office ahead of the expected appointment of a new cabinet under Prime Minister-designate Andy Burnham. Reeves has defended her economic strategy in recent speeches, arguing that her policies have strengthened the UK's financial stability.
There have been some encouraging signs for the wider economy. The International Monetary Fund (IMF) recently raised its forecast for UK economic growth in 2026 to 1%, an improvement from its earlier projection issued in April.
However, risks remain. Renewed fighting in the Middle East has pushed oil prices higher once again, raising concerns about inflation and economic growth in the months ahead. The Resolution Foundation has warned that the government's fiscal flexibility could be significantly reduced, estimating that more than half of the £23.6 billion budget headroom outlined in the Spring Statement may be eroded by the economic impact of the conflict.
A Treasury spokesperson maintained that the government's economic strategy has placed the UK in a stronger position than it was two years ago. Officials highlighted the country's strong first-quarter growth among G7 nations and pointed to forecasts suggesting the UK will be Europe's fastest-growing G7 economy this year and next. They also noted that inflation has stabilized and government borrowing is expected to fall below the G7 average for the first time in more than two decades.
While May's growth offers a positive signal, economists agree that the UK's economic recovery remains fragile, with global energy markets and geopolitical developments likely to shape the country's financial outlook for the remainder of the year.
