The UK economy has encountered troubled waters again, contracting by 0.1% in May and 0.3% in April. These data raise concerns about the sustainability of the economy.
Decrease in Gross Domestic Product
According to the Office for National Statistics (ONS), the UK's gross domestic product (GDP) fell by 0.1% in May after a reduction of 0.3% in April. This two-month decline paints a grim picture of the economy. It is noted that the contraction occurred against economists' forecasts, who expected a 0.1% increase.
Decline in Consumer Spending
Amid the economic slowdown, domestic consumption has also decreased. Retail sales fell in May as households tightened spending due to rising prices of essential goods. Meanwhile, exports of goods to the US remain below normal levels. Trade ministers have reported that discussions with the United States have yet to yield results.
Job Losses Amid Economic Pressure
More than 250,000 jobs have been lost since October 2024 due to the introduction of new payroll taxes. The retail, hospitality, and construction sectors have seen the highest number of layoffs. In response to high minimum wage laws, many businesses are opting to lay off workers or halt hiring altogether.
Given the ongoing economic pressures and uncertainty regarding taxes and trade agreements, predictions of further economic growth in the UK appear doubtful.
