The UK economy dipped by 0.1% in May 2025, marking the second monthly GDP decline in a row after April’s 0.3% drop. March’s figures were revised up to show a 0.4% gain, but that wasn’t enough to offset the slowdown.
Jeremy Batstone-Carr, European strategist at Raymond James Investment Services, said the figures show the economy is struggling to build momentum. “Today’s data confirms that the growth recorded over Q1 2025 was a one-off occurrence, owing to economic activity pulled forward ahead of the US’s ‘Liberation Day’ tariff deadline,” he said.
Over the three months to May, GDP still grew by 0.5%, mainly thanks to stronger services activity earlier in the period. Services output inched up 0.1% in May, helped by a 2.0% rise in information and communication.
But production was much weaker, dropping 0.9% as manufacturing slipped 1.0% and mining and quarrying contracted by 3.2%. Construction output also shrank 0.6% in May, though it rose 1.2% over the quarter, boosted by infrastructure work.
The National Institute of Economic and Social Research warned that the UK’s economic outlook remains weak.
Hailey Low, Associate Economist, said: “Failure to implement the planned spending cuts has further eroded the UK’s fiscal space and its ability to respond to future shocks.” She added that with strained public finances and muted growth prospects, the Chancellor faces tough choices to raise taxes or cut spending in the autumn budget.
David Bharier, Head of Research at the BCC, said growth “remains fragile, lacking sustained drive.”
“Strong, sustainable growth is the only route out of the Chancellor’s current fiscal trap,” Bharier added, noting weak SME sentiment and calling for simpler taxes and faster policy action.
Rob Wood, chief UK economist at Pantheon Macroeconomics, said May's decline looks overstated and should partly reverse. He noted auto and pharma output were volatile, while energy supply barely rebounded after April’s slump. Services rose 0.1%, with legal activity up strongly.
Wood expects a rebound in June, helped by better retail, real estate, and hospitality data. He also said underlying growth is solid and predicts GDP could pick up to 0.3% quarter-on-quarter in Q3, despite tax and inflation headwinds.
“Headline GDP disappointed, which will keep the market pricing a high probability of an MPC rate cut in August, with CPI and labour market data next week the only barriers to that rate reduction now," Wood said.
The Office for National Statistics noted that these GDP figures are early estimates and could be revised.
“All hints suggest that the UK economy will suffer a very downbeat year in 2025, before staging a partial improvement in 2026,” Batstone-Carr added.
-- updated with additional reactions --