GDP still hits 0.5% quarterly growth despite monthly declines
The UK economy shrank by 0.1% in May 2025, marking the second consecutive monthly decline after April’s 0.3% drop.
Despite the slowdown, the economy expanded by 0.5% in the three months to May, compared to the previous three-month period ending in February, according to the latest figures from the Office for National Statistics (ONS).
Services output posted modest a monthly growth of 0.1% in May, recovering slightly from April’s 0.3% decline. Over the three-month period to May, services rose by 0.4%.
Manufacturing and industrial production weakened in May, falling by 0.9%, following a 0.6% drop in April. However, output in the production sector rose 0.2% in the latest three-month comparison.
The construction sector also reported a 0.6% decrease in May, reversing some of April’s 0.8% increase. Still, it showed stronger momentum over the three months to May, growing by 1.2%..
GDP fell 0.1% in May 2025 but grew 0.5% in the three months to May.
— Office for National Statistics (ONS) (@ONS) July 11, 2025
Services grew (+0.1%) in May but production (-0.9%) and construction (-0.6%) both fell.
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“The economy contracted slightly in May with notable falls in production and construction, only partially offset by growth in services,” said Liz McKeown, ONS director of economic statistics.
“However, across the latest three months as a whole, the economy still grew. This reflected strength earlier in the year that resulted, in part, from some activity being brough forward to February and March.”
For Richard Pike, chief sales and marketing officer at mortgage servicing provider Phoebus, this new monthly drop in gross domestic product (GDP) “highlights just how fragile the UK’s economic recovery remains.”
While not unexpected given the broader slowdown in activity, Pike said the figures reinforce the view that momentum is stalling across the board.
“For the Bank of England, this adds further weight to the case for a rate cut, potentially as soon as August,” he said. “Inflation is gradually easing, giving policymakers more room to act.
“However, any move is likely to be carefully measured. The bank’s Financial Policy Committee (FPC) said on Wednesday that geopolitical tensions and trade disputes continue to pose risks to UK financial stability. With that in mind, the bank will remain mindful of inflation risks and the potential impact of quantitative tightening, particularly in such a fragile growth environment.”
The Bank of England is widely expected to assess the latest data closely ahead of its next monetary policy decision, with markets watching for any shift in its stance amid signs of weakening economic momentum.
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