GDP shrinks 0.1% in May

Gross domestic product (GDP) fell by 0.1% month-on-month in May, after dropping by 0.3% in April, the Office for National Statistics (ONS) has revealed.

In the three months to May, GDP is estimated to have increased by 0.5% compared to the three months to February 2025. The ONS said that this was largely due to growth in the services sector.

Chief sales and marketing officer at Phoebus, Richard Pike, said that the latest results show "just how fragile" the UK economy is.

He added: "While not unexpected given the broader slowdown in activity, it reinforces the view that momentum is stalling across the board.

"For the Bank of England, this adds further weight to the case for a rate cut, potentially as soon as August. Inflation is gradually easing, giving policymakers more room to act. However, any move is likely to be carefully measured."

Across this period, monthly services output increased by 0.1%, following a drop of 0.3% in April, while production output decreased by 0.9%.

Construction output is also estimated to have fallen by 0.6%, after increasing by 0.8% in April.

Head of financial analysis at AJ Bell, Danni Hewson, concluded: "After ‘Awful April’ the expectation was that the UK economy would have dusted itself off and at least managed to eke out a tiny amount of growth, but instead the country’s economic engine was stuck in reverse.

"The threat of Donald Trump’s tariffs meant that many manufacturers brought forward production to earlier in the year as US customers clamoured to import goods before taxes were imposed. A trade deal between the US and UK has mitigated some of the damage, but the uncertainty and delays in getting some of the measures across the line meant some businesses like Jaguar Land Rover simply stopped exporting for a time.

"If businesses aren’t growing and are putting investment and expansion plans on hold until they feel more confident, the weakness which seems to have become embedded in the UK economy will continue. There have been signs that confidence is improving slowly but it remains fragile, and the rest of the year looks set to be volatile."



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