Financial News: UK Economy Grows 0.1%

UK Economy Grows 0.1%

(RTTNews) - The UK economy expanded at a marginal pace in May as the service sector provided momentum but renewed tensions in the Middle East threaten the outlook.

Gross domestic product grew unexpectedly by 0.1 percent, offsetting a 0.1 percent fall in April, which was the first drop since October 2025, the Office for National Statistics reported Thursday. GDP was forecast to remain flat in May.

The monthly growth was driven by a rebound in the services output. Partially offsetting the gain, industrial and construction output contracted from April.

ING economist James Smith said, "We're still a bit dubious about the UK's latest growth data." "On the face of it, it looks great."

Smith noted that the impact of the Iran war and the spike in energy prices is likely to show more clearly over the summer. He expects activity to slow into summer.

Confederation of British Industry Senior Lead Economist Ben Jones said the economy managed to eke out modest growth in May. However, the broader sectoral picture was mixed, suggesting that the UK continues to struggle to build sustained momentum.

ONS data showed that services output rose 0.3 percent in May compared to a 0.1 percent fall in April. Meanwhile, industrial output declined 0.5 percent, following 0.2 percent rise in April. Within industrial output, manufacturing edged up 0.1 percent.

At the same time, construction output shrank 0.8 percent after a 0.1 percent decrease in April.

Compared to same period last year, GDP advanced 1.3 percent in May, data revealed.

In three months to May, GDP grew 0.7 percent, following a growth of 0.8 percent in the three months to April. The economy expanded 1.1 percent from the previous year.

Another data from ONS showed that the UK visible trade gap narrowed to four-month low of GBP 18.66 billion in May from GBP 24.58 billion in April. At the same time, the surplus on services trade rose slightly to GBP 17.6 billion from GBP 17.5 billion in the previous month.

As a result, the total trade deficit declined to GBP 1.04 billion from GBP 7.05 billion in the previous month.

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