Britain’s economic output grew more than expected in May, official data showed on Thursday, providing an early boost to the country’s newly elected Labour government.
UK economy returns to growth, boosting new government
The UK’s Office for National Statistics said in a statement that gross domestic product (GDP) growth rose to 0.4% in May, up from flat in April.
Analysts had predicted economic growth of 0.2% in May.
“Growing our economy is our mission and every minute counts,” Britain’s new finance minister, Rachel Reeves, said in response to Thursday’s figures.
“We’ve entered a decade of national renewal but we’re only just getting started,” added Reeves, who was appointed by the new chancellor, Keir Starmer, to become the country’s first female finance minister.
Last week, his centre-left Labour Party won a landslide victory in the UK general election, ending 14 years of Conservative rule.
Reeves vowed on Monday to “immediately repair the foundations” of the UK economy, which is driven by onshore wind power and housebuilding.
Liz McKeown, director of economic statistics at the Office for National Statistics, said the UK economy grew across all key sectors in May.
“It was a good month for many retailers and wholesalers, as they recovered from a weak April when wet weather kept shoppers away from stores,” McKeown said.
“Housing and infrastructure projects drove the construction industry to its fastest growth in nearly a year after the recent slowdown,” he added.
Meanwhile, the services sector remains a key driver of growth after the UK emerged from a brief recession earlier this year.
Analysts said the GDP data may prompt the Bank of England to wait a little longer before starting to cut interest rates in the face of slowing inflation.
“The current situation, with the economy growing at a slightly faster pace than expected, suggests Bank of England policymakers may be a little more cautious about voting to cut interest rates when they next meet on August 1,” said Susanna Streeter, head of finance and markets at Hargreaves Lansdown.
Before Thursday’s data, markets had been expecting the Bank of England to cut interest rates at its next regular policy meeting.
The British pound hit a four-month high against the dollar on Thursday as analysts bet a rate cut in September is more likely.
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Hargreaves Lansdown
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