Economy rebounds from April contraction, though energy costs and political transition cloud the picture
The UK economy grew by 0.1% in May 2026, reversing a contraction of the same magnitude recorded in April, according to official data released by the Office for National Statistics (ONS) on Thursday.
The monthly figure matched the consensus forecast among economists polled by Reuters.
Over the three months to May, GDP expanded by 0.7%, marginally below the upwardly revised 0.8% recorded in the three months to April.
Services output was the primary driver of May's monthly growth, rising 0.3%. Production fell 0.5% and construction declined 0.8% over the same period. On a rolling three-month basis, services grew 0.7%, production edged up 0.1%, and construction posted the strongest sectoral gain at 1.6%.
GDP grew by 0.7% in the 3 months to May 2026, following a revised growth of 0.8% in the 3 months to April 2026.
— Office for National Statistics (ONS) (@ONS) July 16, 2026
Services (+0.7%), Production (+0.1%) and construction (+1.6%) were all up.
Read more ➡️ https://t.co/XFgBKqkoNP pic.twitter.com/eUd6FsgTq8
The data lands as Andy Burnham prepares to succeed Keir Starmer as prime minister next week. The incoming Labour leader faces a backdrop of weak growth, strained public finances, and renewed upward pressure on energy costs following a resumption of hostilities in the Middle East.
The International Monetary Fund has upgraded its full-year UK GDP growth forecast to 1%, an increase of 0.2 percentage points from its April projection.
"Following April's decline, it's encouraging to see the economy return to growth in May, even if the increase is modest at 0.1%," said Richard Pike (pictured right), sales and marketing director at financial services software provider Phoebus.
"The reality is the UK remains in a low-growth environment and periods of expansion and contraction are likely to alternate over the coming months."
Pike noted the broader implications for the housing and housebuilding sectors. "If the economy can maintain a steady, sustainable growth path, that should gradually feed through into higher transaction volumes, greater market confidence and increased investment in new housing supply," he said. "For a housebuilding sector that has faced a number of challenges in recent years, any evidence of improving economic stability will be welcomed."
On the political transition, he added: "We've got a new PM waiting in the wings and we're eagerly awaiting more detail about his polices. Some people are talking about a 'Burnham Bounce' so it will be interesting to see what impact he, and a potential new chancellor, will have on the economy."
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