UK economy shrinks in May

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14 Jul 2023

Britain's economy shrank last month partly due to the additional bank holiday for the King's Coronation, according to the Office for National Statistics (ONS).

The economy contracted by 0.1% in May following growth of 0.2% in April, ONS data showed. The rising cost of living and higher interest rates have been squeezing households and businesses, the ONS said.

It said the manufacturing, energy and construction sectors fell in May, along with sales at pubs and bars.

David Bharier, Head of Research at the British Chambers of Commerce (BCC), said the figures provide 'further evidence of the precarious state of the UK economy'.

He added: 'While businesses have been incredibly resilient in stomaching multiple waves of economic crises, our latest Quarterly Economic Survey shows that most firms are still not reporting improved business conditions.

'Positively, slightly fewer businesses report inflationary pressures, but interest rates have grown as a concern for businesses. We are starting to see more businesses report rising borrowing costs, but we are yet to understand the full impact of rising interest rates.

'Businesses are operating in a climate with a high degree of uncertainty, and government and Bank of England policy both need to be very responsive to developments.'