UK economy shrinks again in May, raising new worries over outlook

By Andy Bruce and William Schomberg

(Reuters) -Britain's economy contracted unexpectedly for a second month running in May, underlining worries about momentum going into the second half of the year in an increasingly uncertain global environment, official data showed on Friday.

Gross domestic product declined by 0.1% after a 0.3% drop in April, the Office for National Statistics said.

Economists polled by Reuters had mostly forecast that gross domestic product would rise by 0.1% from April's level. While the services sector eked out a sliver of growth, declines in industrial output and construction dragged down overall output.

The reading poses downside risks to expectations that the economy grew in the second quarter of 2025, after a surge early in the year.

Britain's economy expanded rapidly in the first quarter of 2025, outstripping growth in other countries in the Group of Seven advanced economies. In May the Bank of England revised up its full-year growth forecast to 1%.

However, much of the growth in early 2025 was likely to have been linked to the expiry of a tax break for some home purchases in April which boosted the sector before the deadline, and a rush by manufacturers to beat higher U.S. import tariffs.

The BoE has said it thinks the economy grew by about 0.25% in the second quarter of 2025. To achieve any growth for the quarter, the ONS said June's monthly data would need to show at least a flat reading.

(Reporting by Andy BruceEditing by William Schomberg and William James)