Economic Rebound ‘Slower than Expected’ in May

The UK economy grew by 1.8 per cent during May but that rate of expansion was considerably slower than most experts had been hoping for and expecting to see.

Overall output across the economy went into sharp decline in March and April as the coronavirus crisis took hold and the country went into lockdown.

More activity was possible in May as compared to the two previous months but it’s clear that the economy remains “in the doldrums”, as the Office for National Statistics (ONS) has said in response to its own figures.

Economists had generally been anticipating GDP growth figures of around 5 per cent for May but the initial data from the ONS shows a notably slower rate of recovery.

Official figures showed a contraction in overall economic output of 6.9 per cent in March and 20.4 per cent in April, which left the UK economy effectively 24.5 per cent smaller at the end of April than it was at the end of February.

“Manufacturing and house-building showed signs of recovery as some businesses saw staff return to work,” said Jonathan Athow, the ONS’ deputy national statistician.

“Despite this, the economy was still a quarter smaller in May than in February, before the full effects of the pandemic struck,” he added.

According to the latest figures, retailers were able to increase their sales levels during May, with sales online being chalked up at a record pace across the month.

However, many businesses have been left completely or partially unable to function as they would normally against the backdrop of the Covid-19 outbreak.

“While recent indicators suggest we have turned a corner, it’s clear many sectors are still in acute distress,” noted Alpesh Paleja, lead economist at the Confederation of British Industry.

“Sadly, the legacies of this crisis will likely be felt for some time,” he said. “The chancellor’s summer statement was an important step forward, but many viable firms remain in danger as a result of reduced cash flow and a lack of consumer demand.

“The government must continue to back a long-term, sustainable recovery while responding to the challenges companies are experiencing right now.”