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The UK economy returned to growth in May as more shoppers returned to high streets, official figures show.
The UK Office for National Statistics (ONS) announced that gross domestic product (GDP) increased by 0.4% in May, signaling a faster recovery in growth than many had expected.
Economists had forecast that Britain’s GDP would grow 0.2% in May. The British economy grew at the start of 2024 and narrowly avoided a recession, but stagnated in April after wet weather hit consumer spending.
Liz McKeown, ONS director of economics and statistics, said: “The economy grew strongly in May, with increases in all major sectors.”
“It was a good month for many retailers and wholesalers, as they recovered from a weak April.
“Construction grew at its fastest pace in nearly a year after the recent downturn, with homebuilding and infrastructure projects driving the industry.”
Responding to the news, Finance Minister Rachel Reeves said: “Growing our economy is our national mission and every minute counts.”
“That’s why this week I’ve already taken the urgent steps we need to repair the foundations of our economy, to rebuild Britain and make every part of Britain better. We’ve started a decade of national recovery, but we’re only just getting started.”
Following Labour’s landslide victory in last week’s general election, the new government announced a series of measures aimed at boosting growth.
Housebuilding targets have been reintroduced, the planning system has been reformed to remove the ban on onshore wind farms, and a National Wealth Fund has been announced to attract investment.
Announcing the new measures, the Chancellor said that if the UK economy had grown at the average rate of OECD economies since 2010, it would be £143.3 billion larger and add £5,053 to every UK household’s income.
She promised to bring about a “new era of economic growth” for the UK and said she would “act immediately to put the UK’s economic foundations back on track”.
Meanwhile, inflation is set to return to the government’s 2% target after a long period of rising prices, reaching a peak of 11.1% in October 2022, the highest level in 41 years.
As inflation falls, the Bank of England is expected to start cutting interest rates as early as August, offering relief and hope to households facing sharp increases in mortgage costs.