UK economy returns to growth in May after April contraction

The UK economy returned to growth in May, expanding by 0.1% after shrinking in April, according to the latest official figures. The Office for National Statistics said the rebound was driven by the services sector, while production and construction both fell. The data offers a modest improvement after the previous month's contraction, but it also points to an uneven recovery across the economy.

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The ONS said the economy grew by 0.7% in the three months to May compared with the previous three-month period. Liz McKeown, director of economic statistics at the ONS, said the economy recorded robust growth over that period, although the pace eased slightly as the latest two months showed a weaker picture. The figures were published on 16 July and reflect activity in the month after April's decline.

Economists said warmer weather in May helped consumer spending, with some of that support expected to continue into June and July. However, they also warned that strength in services may not be enough to offset weakness in other parts of the economy. One economist said recent rises in energy prices, linked to tensions in the Middle East, could pose a risk to the growth outlook as financial conditions tighten.

The release comes against a backdrop of renewed concern about energy costs after hostilities resumed between the United States and Iran last week. Oil prices have risen from about $72 a barrel to $84, although they remain below the peak of around $120 seen earlier this year. That matters because higher energy prices can feed through to household bills, business costs and inflation expectations, all of which can affect growth.

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The April contraction had already been linked to the impact of the US-Israel war with Iran beginning to affect businesses. The latest figures therefore suggest that the economy has not moved in a straight line, with services providing support while other sectors remain under pressure. A Treasury spokesperson said the government's economic plan had put the UK in a much stronger position than two years ago, citing the fastest growth in the G7 in the first quarter and stability restored according to the OECD.

What remains unclear is whether the May improvement marks the start of a more durable recovery or only a temporary rebound. The next few months will show whether consumer spending can keep supporting services and whether higher energy prices begin to weigh more heavily on demand. For now, the data points to growth returning, but with significant risks still in place.

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