UK’s economic growth slowed in May despite Covid lockdown easing

GDP still 3.1 per cent lower than before pandemic struck

The UK’s economy continues to recover from the shock of coronavirus, but growth slowed in May despite the easing of lockdown restrictions, figures show.

The Office for National Statistics (ONS) said GDP grew by 0.8 per cent in May following a 2.3-per-cent rise the month before, disappointing analysts who had predicted an increase of 1.5 per cent.

May's economic growth was largely driven by the services sector, which reported growth of 0.9 per cent after restrictions were eased for hospitality, leisure and arts companies on 17 May.

Customers’ return to restaurants and holiday destinations led the accommodation and food services sector in particular to a 37.1-per-cent jump on April’s figures.

The ONS added that GDP had still not recovered to pre-pandemic levels, with the reading 3.1 per cent lower than in February 2020. That observation by statisticians comes after the OECD warned that UK employment rates may not return to pre-Covid levels until 2023.

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.

“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.”

Rishi Sunak, the chancellor, said the UK’s rollout of vaccines had allowed people to get out and drive the economic recovery.

He added: “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.”

However, Labour warned the economy remained fragile. Bridget Phillipson, the shadow chief secretary to the Treasury, blamed the government for “causing the UK to experience the worst economic crisis in the G7”.

The automotive sector did not fare well in the ONS’ latest figures. A global shortage of microchips led to the biggest fall in carmakers’ output since April 2020, the body said, with transport equipment manufacturing output falling 16.5 per cent in May.

Additional reporting by Press Association