ONS data shows UK economy grew 0.1% in May despite Iran war impact
The Office for National Statistics reports GDP expansion aligns with forecasts, but the Resolution Foundation estimates the conflict will erase more than half of Chancellor Rachel Reeves’ fiscal buffer.
Official figures from the Office for National Statistics indicate the UK economy expanded by 0.1 per cent in May, reversing a 0.1 per cent contraction recorded in April. The data aligns with economist forecasts and suggests the economy has demonstrated resilience against the pressures of rising energy costs linked to the ongoing conflict in Iran.
Despite the dip in April, the growth in May indicates that the economy has been more robust than some analysts had feared in the face of the Middle East conflict. The Office for National Statistics confirmed the rise, noting that the figures were consistent with expectations for a modest monthly expansion.
The International Monetary Fund has recently upgraded its forecast for UK GDP growth for the full year to 1 per cent, an increase of 0.2 percentage points from its April projection. This revision reflects a degree of confidence in the short-term stability of the economic output, even as geopolitical tensions persist.
However, the economic outlook remains highly uncertain as oil prices have risen sharply again following the resumption of hostilities in the Middle East this week. The Resolution Foundation thinktank estimates that more than half of the £23.6bn in fiscal headroom left by outgoing Chancellor Rachel Reeves will be wiped out by the effects of the war, significantly constraining future policy options.
These economic challenges underline the difficult position facing Andy Burnham as he takes over as Labour leader. The erosion of the fiscal buffer established at the spring statement presents a complex landscape for governance, requiring careful management of public finances amid volatile global energy markets.
