UK economy contracts slightly in May

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The UK economy marginally contracted in May as an extra bank holiday pushed activity down, but the decline was less steep than economists had expected.

UK gross domestic product fell 0.1 per cent between April and May, following an expansion in the previous month, data published by the Office for National Statistics showed on Thursday. Economists polled by Reuters had expected a 0.3 per cent drop.

Darren Morgan, ONS director of economic statistics said: “GDP fell slightly as manufacturing, energy generation and construction all fell back with some industries impacted by one fewer working day than normal.”

He added that despite the Coronation bank holiday, sales fell at pubs and bars after a strong April while employment agencies had another poor month.

Services were flat overall, with less impact from strikes than in the previous month.

In the three months to April, output was unchanged compared with the previous three months, a marginally better result than the 0.1 per cent contraction forecast by analysts.

The UK economy has been largely flat for the past year as high inflation and rising borrowing costs weigh on household finances and business activity.

Philip Shaw, economist at Investec, said he expected the UK economy to fall into a downturn in the second half of the year “as the impact of higher rates begins to bite more forcefully”.