UK economy shifts back to reverse as GDP falls in May
The UK economy has went into reverse in May as GDP fell by 0.1% fter growth of 0.2% in April.
Economists have pointed to the extra bank holiday for the King’s Coronation for the economy shrinking, but at the broader picture, GDP has shown no growth in the three months to May 2023.
Data from the Office for National Statistics (ONS) shows that production output fell by 0.6% in May after a fall of 0.2% in April.
The construction sector fell by a further 0.2% in May 2023 following a fall of 0.9% in April.
Services output showed no growth in May 2023 following growth of 0.3% in April.
Output in consumer-facing services fell by 0.2% in May 2023 following growth of 1.1% in April.
Mike Randall, CEO of Simply Asset Finance, said: “A sharp U-turn for GDP as output declines in May after slender growth in the month prior, but many will be hoping this is just a small knockback for overall growth in 2023.”
“For businesses in particular, a fall in GDP figures can be disheartening, but it’s important to consider the broader picture when looking at growth. In Q1 this year for example, the economy has already seen a 0.1% increase in GDP, while industry bodies such as the BCC and KPMG forecast overall economic growth to reach 0.3% in 2023.
“We know that businesses remain resilient, and while this decline may knock confidence, it shouldn’t be a reflection on their efforts – rather a sign of growing economic pressures, and a lack of support systems in place. SMEs are the cornerstone of UK business output, and it’s vital they receive the support they need to thrive and enable the growth of our economy.”
The Blackpool-based Federation of Small Businesses called on the Government to give the SME sector a lift in the summer.
FSB national chair, Martin McTague, said: “Despite the tough headwinds, small businesses are still looking to the summer for recovery and growth.
“The Government should build on this spirit of determination and give small firms a lift. We look forward to the imminent conclusion of its payment and cashflow review and hope to see an ambitious package of measures to clamp down on late payments and get funds flowing through supply chains.
“Cutting their fixed costs – by looking at business rates, increasing the VAT threshold, and ensuring that small businesses trapped on high energy tariffs can ‘blend and extend’ their contracts – would relieve margin pressure, and encourage small firms to fulfil their true potential as the engine of recovery.”
