The UK economy is allaying fears by rising 0.5% in May… but will the Bank of England now take steps to raise interest rates to curb rampant inflation?
The British economy defied fears of a looming recession by rising 0.5 percent in May.
Official figures showed that GDP far outperformed the 0.1 percent analysts had estimated.
There was a rebound in all three major sectors of the economy: services, manufacturing and construction.
The earlier estimate of a decline of 0.3 percent in April was also revised down by 0.1 percentage point.
Chancellor Nadhim Zahawi said it was ‘great’ that UK plc was back on positive ground.
However, the better-than-expected results will raise expectations that the Bank of England will take tough measures to curb rampant inflation – expected to be 11 percent by the end of the year.
Concerns about the economy tipping into recession have dampened the Bank’s interest rate movements.
Official figures showed GDP far outperformed the 0.1 percent analysts had estimated
Mr Zahawi said: ‘It’s always great to see the economy growing, but I’m not complacent.
“I know people are concerned, so we will continue to support families and economic growth.
“We are working with the Bank of England to reduce inflation and I am convinced we can create a stronger economy for everyone in the UK.”
Darren Morgan, director of economic statistics at the Office for National Statistics (ONS), said: ‘The economy recovered in May with growth in all major sectors.
‘Health was the main driver, with many more people going to the GP, despite the phasing out of test and trace and the vaccination programs.
Road hauliers also had a busy month, while travel agencies did well with pent-up demand for summer holidays.
“After several difficult months, there was widespread growth in production, while construction also performed well, with housing construction and office renovation driving growth.”
Chancellor Nadhim Zahawi said it was ‘great’ that UK plc was back in the black