UK economy begins tepid recovery in May after record slump

Gross domestic product rose by 1.8% but UK economy still 24% smaller than a year ago

Photograph: iStock

Photograph: iStock

 

Britain’s economy took a first step on the long road to recovery from the Covid-19 crisis in May, as activity began to pick up after lockdown restrictions began to ease, but there was less of a rebound than economists had forecast.

Gross domestic product rose by 1.8 per cent in May after slumping by a record 20.3 per cent in April, Britain’s first full month of lockdown, the Office for National Statistics said, below all forecasts in a Reuters poll of economists.

Over the three months to May, the economy shrank by 19.1 per cent and compared with a year ago it is 24.0 per cent smaller.

“The pick-up in output in May is more likely to reflect the partial release of pent-up demand as restrictions began to loosen, rather than evidence of a genuine recovery,” said Suren Thiru, head of economics at the British Chambers of Commerce.

The weak rebound was driven by just 0.9 per cent growth in Britain’s large services sector, with weakness in professional services, commercial property and computer programming.

Death toll

More than 44,000 people in Britain have died from the disease, the highest death toll in Europe.

Britain’s government closed non-essential shops and other businesses to the public on March 23rd, shortly after ordering the closure of bars, restaurants and cinemas.

In May, there was a limited relaxation of lockdown rules, and more businesses became used to operating under the new restrictions.

Private sector data has shown some signs of recovery in May and June, as lockdown measures eased, but the Bank of England has warned that a big rise in unemployment is likely later this year as temporary job support measures end.

“Today’s figures underline the scale of the challenge we face. I know people are worried about the security of their jobs and incomes,” finance minister Rishi Sunak said after Tuesday’s data.

Last week finance minister Sunak announced an extra £30 billion of stimulus to limit the increase in unemployment. – Reuters