United Kingdom returns to growth in May but 'storm clouds gathering'

United Kingdom returns to growth in May but 'storm clouds gathering'

United Kingdom returns to growth in May but 'storm clouds gathering'

The month-on-month improvement was driven by growth in the automotive industry, as some plants returned to production following planned shutdowns meant to coincide with the original Brexit deadline in March.

However, analysts remain gloomy about the outlook for the economy in the second quarter, which runs from April to June.

Meanwhile, exports of United Kingdom goods increased by 0.8% over the three-month period, buoyed by increased manufacturing exports. The overall manufacturing sector also bounced back strongly. But barring a miracle from June data, the United Kingdom economy is likely to have contracted in Q2 for the first time in seven years. "This was mainly due to the partial recovery in auto production".

But because April, following a series of plant shutdowns, saw the worst fall in vehicle production since records began, the auto sector is still smaller than it was in March.

"GDP grew moderately in the latest three months, with IT, communications and retail showing strength", Rob Kent-Smith, head of GDP for ONS, said.

"Despite this, there has been a longer-term slowdown in the often-dominant services sector since summer 2018".

Volkswagen Beetle goes out of production
He added "While its time has come, the role it has played in the evolution of our brand will be forever cherished". It was powered by an air-cooled engine mounted at the rear and was known for its simple design and reliability.

Growth for the three months to May was also 0.3%, with all sectors in the black, but economists warn this may not be enough to avoid recession in Q2.

Separate data showed that the UK's overall trade deficit, which measures how much more Britain imports than exports, decreased by £4.6billion to £12.6billion in the 12 months to May.

Rolling three-month growth in the construction sector slowed for the second month in a row, while month-on-month growth in the sector was 0.6%, representing a recovery from the negative growth seen in the previous two months.

The data for May is expected to recover slightly following the drop in April but overall, the United Kingdom economy has largely struggled in the second quarter of the year.

Ben Brettell, senior economist at Hargreaves Lansdown, added: "UK GDP rebounded 0.3% in May, having lost 0.4% in June, today's ONS release showed".

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