Britain’s economy has slipped into a second consecutive month of contraction, according to new data from the Office for National Statistics (ONS), casting a shadow over the Labour government’s ambitious economic revival plans. The country’s gross domestic product (GDP) declined by 0.1 percent in May, following a sharper 0.3 percent drop in April. These figures contradict forecasts from economists who had predicted a slight increase of 0.1 percent.
This decline presents a fresh challenge for Prime Minister Keir Starmer’s administration, which is banking on economic expansion to fund vital public programs. The government’s ability to deliver on promises such as reforming the National Health Service (NHS) and overhauling infrastructure hinges on consistent growth. Recent backtracks on welfare reforms and heating subsidies for pensioners have only intensified the pressure.
Finance Minister Rachel Reeves acknowledged the setback, describing the data as “disappointing” and affirming the government’s determination to “do more.” Despite unveiling a multi-billion-pound investment package and pledging to reduce regulatory barriers, the path to recovery remains steep.
Separate ONS data offered a glimmer of hope, showing a £0.3 billion uptick in exports to the United States during May, partially recovering from the sharp drop in April caused by new tariffs under President Donald Trump’s administration.
However, analysts remain cautious. Investment strategist Lindsay James warned that current government initiatives are unlikely to significantly boost the economy without improved business and consumer confidence, especially under ongoing inflationary pressures.
ONS Director Liz McKeown highlighted significant declines in key sectors such as production and construction, pointing to oil and gas extraction, car manufacturing, and pharmaceutical output as major contributors to May’s downturn.
The economic strain is testing the Labour government’s early momentum and raising questions about how quickly meaningful growth can be restored.
