News | Published July 15 2020

UK economy grew 1.8 per cent in May

The UK economy grew by a modest 1.8 per cent compared to April, rebounding slower than economists had anticipated.

Signs of recovery were seen in manufacturing and construction as people began to return to work, with both sectors growing by over eight per cent.

The increase followed a shrinkage of 6.9 per cent in March and a record contraction of 20.4 per cent for the month of April.

Economists also said the 1.8 per cent growth was “disappointing” having forecast five per cent or more.

The Office for National Statistics highlighted that the UK economy is now 24.5 per cent smaller than it was back in February this year, having shrunk by 19.1 per cent in the three months to May compared with the previous three months.

ONS deputy national statistician for economic statistics Jonathan Athow said: “The economy was still a quarter smaller in May than in February, before the full effects of the pandemic struck.

"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."

Chancellor Rishi Sunak said that the economic figures “underline the scale of the challenge” the UK faces in getting the economy back on track.

Sunak added: "I know people are worried about the security of their jobs and incomes. That's why I set out our Plan for Jobs last week, following the PM's new deal for Britain, to protect, support and create jobs as we safely reopen our economy.

"Our clear plan invests up to £30 billion in significant and targeted support to put people's livelihoods at the centre of our national renewal as we emerge through the other side of this crisis."

Capital Economics UK economist, Thomas Pugh, said that the numbers constituted "a disappointing first step on the road to recovery", adding that "hopes of a rapid rebound from the lockdown are wide of the mark".

Predicting a much more drawn-out route to recovery, Pugh said: “Indeed, the path to full economic recovery will probably be much longer than most people anticipate.”

Meanwhile, the head of economics at the British Chambers of Commerce, Suren Thiru, said: "The pick-up in output in May is more likely to reflect the partial release of pent-up demand as restrictions began to loosen rather than evidence of a genuine recovery.

"While UK economic output may grow further in the short term as restrictions ease, this may dissipate as the economic scarring caused by the pandemic starts to bite, particularly as government support winds down."

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Authored by

Alexander Bridge-Wilkinson
Junior Editor
July 15 2020

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