Is the UK economic recovery starting to falter?

The latest official figures show growth of 0.8% in May, as lockdown measures eased, with GDP growth slowing from the 2.3% recorded a month earlier.

According to the Office for National Statistics (ONS), the size of the UK economy has still not been restored to its pre-pandemic levels, remaining 3.1% smaller than it was in February 2020.

The latest economic data are disappointing as analysts were expecting a rise of 1.5% in May.

Growth in May was primarily driven by the dominant services sector, with growth of 0.9% in the month. Many coronavirus restrictions were relaxed on 17th May, allowing those in the hospitality, leisure and arts sectors to restore trading.

One part of the economy that was especially strong was accommodation and food, up 37.1% compared to a month earlier.

Jonathan Athow, deputy national statistician for economic statistics at the ONS, said:

“The economy grew for the fourth consecutive month, albeit at a slower pace than seen recently, but remains around 3% below its pre-pandemic peak.

“Pubs and restaurants, who were again able to welcome indoor guests, were responsible for the vast majority of the growth seen in May.

“Hotels also saw a marked recovery as restrictions lifted.”

There was growth of 0.8% in May in the production sector, driven mainly by higher demand for electricity and gas during a spell of poor weather.

The construction sector shrunk by 0.8% in May, its second consecutive monthly decline. However, this is one sector that remains slightly larger than it was before the onset of the pandemic.

Responding to the latest economic data, Chancellor Rishi Sunak said:

“It’s great to see people back out and about thanks to the success of the vaccine rollout, and to see that reflected in today’s figures for economic growth.

“Our unprecedented package of support – including business loans, the furlough scheme and a reduced rate of VAT for the hospitality and tourism sectors – has protected millions of jobs and helped businesses survive the pandemic.”

And in response, shadow chief secretary to the Treasury, Bridget Phillipson, said:

“After causing the UK to experience the worst economic crisis in the G7, the Conservatives should be getting the economy powering on all cylinders.

“Instead, this morning’s growth data shows how fragile the UK’s economic recovery is.”