The UK economy defied expectations to grow by 0.5% in May 2022, following a decline in GDP of 0.2% in April, according to the Office for National Statistics (ONS).
Monthly GDP was expected to stagnate but is now estimated to be 1.7% above pre-pandemic levels in February 2020, with an increase of 0.4% in the three months to May and 3.5% in the 12 months to May. The rise was driven by a rise in production, manufacturing, construction, and healthcare activity.
While output in consumer-facing services – food and beverage serving activities, retail trade, travel and transport, and entertainment and recreation – declined by 0.1%, following downward growth of 2.2% in April and placing it at 4.7% below pre-pandemic levels in May.
While other services were at 3.6% above pre-pandemic levels, the fall in consumer-facing services was primarily driven by 0.5% decline in retail trade.
Industry-wide trends include price increases due to a rise in input costs, with the latter rising to the highest levels since ONS records began in January 1985. Many businesses referenced rises in the cost of fish and cooking oil alongside fuel and electricity.
Ben Jones, lead economist at the Confederation of British Industry, has called for an overhaul of business taxation to drive investment.
Commenting on the GDP figures, he said: “This is in part due to the impact of the jubilee bank holidays, and this noise will continue to obscure the true state of the economy over the next few months. In reality, CBI surveys and real-time data point to subdued economic momentum.
He added that the next prime minister should prioritise economic growth. “Tax policy is an important part of this, but we need tax changes that drive investment rather than fuel inflation.”
