Britain’s economy shrank by 0.1% in May 2025, marking its second consecutive monthly decline and casting fresh doubt over the strength of the post-pandemic recovery.
The latest figures from the Office for National Statistics defied analyst expectations of modest growth, underlining deepening concerns within the Treasury and among business groups.
The drop was largely driven by a sharp 0.9% fall in production output, particularly in oil and car manufacturing, alongside a 0.6% decline in construction activity.
These weaknesses come despite a slight uptick in services, which rose by 0.1%, buoyed by gains in legal services and software development.
Summary
🏭 Production output fell by 0.9%, led by declines inl oil and gas extraction and car manufacturing.
🏗️ Construction dropped 0.6%, reversing April’s gains.
🛍️ Services eked out a 0.1% rise, with legal services and computer programming offsetting a sharp fall in retail.
Finance Minister Rachel Reeves faces increasing pressure as her economic reboot agenda collides with rising domestic costs and global headwinds.
April’s national insurance hikes and Trump’s aggressive tariff policy have created economic drag, despite the UK having brokered a swift bilateral trade agreement with the U.S.
The three-month growth rate stands at 0.5%, but economists now predict a meagre 0.1% expansion for the second quarter.
With inflation edging back above 3% and interest rate cuts looming, the government must navigate a delicate balance between stimulus and stability.
The first official Q2 GDP estimate will be released on 14th August 2025, with markets braced for further volatility.
UK GDP figures February through May 2025
| Month | % Change in GDP | Key Drivers/Comments |
|---|---|---|
| February | +0.5% | Strong services and frontloaded activity pre-tariffs |
| March | +0.2% | Moderate growth, tax rise concerns begin |
| April | –0.3% | Domestic tax hikes, Trump tariff shock |
| May | –0.1% | Production –0.9%, construction –0.6%; weak manufacturing |