UK Economic Growth Resumes in May

At the beginning of the year the economy experienced a robust start, yet recent months have shown a slowdown as the Middle East conflict has impacted certain sectors.

The Iran war has driven up oil and fuel prices and disrupted supply chains.

The ONS reported that firms across several sectors — including manufacturing, hospitality, travel agencies and entertainment — have cited the conflict as a factor affecting their activity.

Following the recent resumption of hostilities between the United States and Iran, oil prices have climbed from roughly $72 to $84 per barrel, though they remain significantly below the $120 peak observed earlier this year.

“Today’s data confirm that growth remains fragile,” said Fergus Jimenez-England, associate economist at the National Institute of Economic and Social Research.

“As energy prices climb once more, all eyes are now on the new prime minister to deliver much‑needed stability.”

Yael Selfin, chief economist at KPMG, noted that warmer weather and the World Cup may have stimulated consumer spending in June and July, but this “may not be sufficient to offset weakness across other parts of the economy.”

“The recent rise in energy prices, driven by heightened Middle East tensions, could pose a risk to the growth outlook, with financial conditions also tightening as a result,” Selfin said.

According to Paul Dales, chief UK economist at Capital Economics, the May growth “is not an unwelcome boost for incoming Prime Minister Andy Burnham.”

“But with higher energy prices still restraining real incomes, he shouldn’t get complacent.”

A Treasury spokesperson responded to the latest figures, stating: “We have the right economic plan that has placed the UK in a much stronger position than two years ago, achieving the fastest G7 growth in the first quarter and securing OECD acknowledgement of restored stability.”

However, Conservative shadow chancellor Sir Mel Stride accused Chancellor Rachel Reeves of “failing” to boost growth.

“Two years of higher taxes have strained the economy, and now Andy Burnham is proposing additional taxes to fund expanded benefits. While Starmer and Reeves may be departing, the issue extends beyond the chancellor to the broader Labour Party.”

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