May GDP data reveals stagnation in UK economy

The latest gross domestic product (GDP) data for May 2023 from the ONS shows the UK economy has not grown in the three months to May 2023.

Monthly output of the UK economy was down 0.1% in May 2023, following modest 0.2% growth in the previous month. Overall, GDP has increased just 0.1% since March, with monthly size of the economy broadly unchanged since April 2022, and close to the level seen prior to the Covid-19 pandemic.

The majority of sectors of the economy recorded slight falls in output in May 2023, the ONS analysis found. Production output fell 0.6%, and was the main contributor to the overall fall in GDP. Construction saw a 0.2% fall, and services output showed no growth on April’s performance. Consumer-facing services, such as retail and accommodation, saw a 0.2% fall, despite having seen 1.1% growth in the previous month.

Commenting on the causes of stagnation in the UK economy in May, the ONS identified a number of cross-industry themes affecting business output. Manufacturing and construction businesses cited the additional bank holiday to mark the coronation of King Charles III on 8th May as having a negative impact on output, although the entertainment and recreation sector benefited.

Monthly business survey returns also noted that ongoing industrial action, which in May affected the health sector, railways, schools and the civil service, may have had an impact on output also, with the hospitality sector particularly affected by reduced footfall around railway stations.

Despite slow growth in the medium term, the UK has avoided a technical recession (defined as two consecutive quarters of negative growth) following the coronavirus pandemic.