UK economy rebounds 0.5% in May: data

Britain’s economy rebounded in May, official data showed Wednesday, dampening fears of a slowdown despite surging inflation and rising interest rates.

Gross domestic product expanded by 0.5 percent, the Office for National Statistics said in a statement, beating expectations of no growth.

“The economy rebounded in May with growth across all main sectors,” said Darren Morgan, ONS director for economic statistics.

The broad rebound was driven by a bounceback in construction, manufacturing and services.

That followed a 0.2-percent decline in April, which was revised up from a 0.3-percent contraction.

“Health was the biggest driver, with many more people seeing GPs, despite test and trace and the vaccination programmes winding down,” added Morgan.

“Road hauliers also had a busy month while travel agencies fared well with pent-up demand for summer holidays.

“There was widespread growth across manufacturing after several tough months while construction also fared well with housebuilding and office refurbishment driving growth.”

The Bank of England has hiked interest rates five times since December in a bid to tame runaway inflation, which has sparked a cost-of-living crisis in Britain.

UK inflation spiked in May to a 40-year peak of 9.1 percent, a level set to hit double figures this year on soaring energy and food prices according to the BoE.

Capital Economics analyst Paul Dales said the economy was “resilient” but warned over the ongoing risk of recession due to rampant consumer prices.

“It is far too soon to conclude that the economy will be able to get through this period of unusually high inflation largely unscathed,” Dales said.

“With real household disposable incomes set to fall further in the third quarter, a recession is still a real risk.”

The UK government meanwhile welcomed Wednesday’s upbeat data.

“It’s always great to see the economy growing but I’m not complacent,” said finance minister Nadhim Zahawi.

“I know people are concerned so we are continuing to support families and economic growth.”

Zahawi is meanwhile among eight Conservative MPs vying to become Britain’s next prime minister following last week’s resignation of scandal-hit Boris Johnson as Conservative Party leader.