Economy remains on shaky ground 

13 July 2023

There was no growth in the UK economy in the three months to May, largely due to the high cost of living and soaring interest rates.

According to the Office for National Statistics, the economy shrank by 0.1% in May, partly due to the extra bank holiday for the King’s Coronation, which meant there was one fewer working day than normal.

May’s decline followed growth of 0.2% in April. The ONS said the manufacturing, energy and construction sectors fell in May, along with sales at pubs and bars.

But it said the health sector recovered while the IT industry had a “strong month”. Strikes also had less of an impact on the economy than in April.

David Bharier, Head of Research at the British Chambers of Commerce (BCC), said: “Today’s GDP figure showing 0% growth in the three months to May provides further evidence of the precarious state of the UK economy.

“While businesses have been incredibly resilient in stomaching multiple waves of economic crises, our latest Quarterly Economic Survey shows that most firms are still not reporting improved business conditions. 

“Positively, slightly fewer businesses report inflationary pressures, but interest rates have grown as a concern for businesses. We are starting to see more businesses report rising borrowing costs, but we are yet to understand the full impact of rising interest rates.  

“Businesses are operating in a climate with a high degree of uncertainty and Government and Bank of England policy both need to be very responsive to developments.”