The UK economy is forecast to have remained largely unchanged in May, with economists warning that higher energy costs, global uncertainty and weaker business activity continue to weigh on economic growth.
The Office for National Statistics (ONS) is due to release the latest gross domestic product (GDP) figures on Thursday, with analysts expecting another subdued performance following April’s contraction.
Britain’s economy shrank by 0.1% in April, marking the first monthly decline since August 2025. The slowdown followed stronger growth of 0.3% in March and 0.4% in February, raising concerns that the UK recovery has lost momentum.
The April downturn was driven primarily by weaker activity in the services sector, although gains in construction and manufacturing helped soften the overall decline.
Economists believe persistent inflationary pressures, higher fuel prices and the economic impact of the Iran conflict continued to affect businesses and households throughout May.
Chancellor Rachel Reeves acknowledged the effect of the conflict, saying the UK had not chosen to be involved but would inevitably feel the economic consequences through higher energy prices.
Pantheon Macroeconomics expects the UK economy to have recorded zero growth in May, predicting another sluggish month for the services sector while noting that higher oil prices may have provided some support to the energy industry.
Meanwhile, Deutsche Bank has taken a more pessimistic view, forecasting a 0.1% contraction in May GDP.
Its Chief UK Economist, Sanjay Raja, said activity across key industries—including financial services, professional services, information technology and real estate—likely remained subdued throughout the month.
However, Raja noted there were some positive signs, with warmer weather and promotional offers boosting retail sales, particularly for seasonal products such as outdoor furniture and electric fans.
Looking ahead, economists believe economic activity could improve in the coming weeks as England’s progress in the FIFA World Cup encourages increased consumer spending.
Hospitality businesses, including pubs and bars, are expected to benefit from higher footfall and extended opening hours during major tournament fixtures.
The latest GDP figures will provide a clearer picture of whether the UK economy has managed to stabilise or whether continued global pressures are pushing Britain closer to another period of economic weakness.