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UK finally sees growth in economy8k8+com+login during May

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Buses cross Waterloo Bridge with the City of London financial district seen behind, in London, Britain, March 5, 2024. [Photo/Agencies]

The United Kingdom economy bounced back in May, showing signs of growth after a stagnant April and marking a continuation of the country's recovery from last year's recession.

Official figures released on Thursday brought welcome news for the UK's newly appointed finance minister, Chancellor of the Exchequer Rachel Reeves, just days into her role following the Labour Party's victory in last week's general election.

The Office for National Statistics, or ONS, reported a 0.4 percent increase in gross domestic product for May, following April's flat performance, when wet weather dampened consumer spending.

Responding to the latest figures, Reeves said: "Delivering economic growth is our national mission, and we don't have a minute to waste. That is why, this week, I have already taken the urgent action necessary to fix the foundations of our economy to rebuild Britain and make every part of Britain better off.

"A decade of national renewal has begun, and we are just getting started."

The economic growth was double what economists had anticipated.

Quoted in London's Evening Standard newspaper, Rob Wood, chief UK economist at Pantheon Macroeconomics, said: "The UK economy is well and truly putting last year's minor recession behind it. GDP has risen 1.5 percent so far this year, and three-month-on-three-month growth reached the highest since January 2022.

"But these growth numbers feel a bit too good to be true — they are much stronger than business surveys — so we assume some payback in June."

According to the ONS, the services sector, which saw its fifth straight month of expansion, continues to be a key driver for the economy. Retailers rebounded strongly in May, with sales up 2.9 percent, following April's 1.8 percent decline due to poor weather.

The figures suggest the UK economy is poised to outperform the Bank of England's second-quarter growth forecast of 0.5 percent, assuming June does not see a significant downturn. This comes as a surprise to economic experts, who had anticipated a more modest GDP increase of 0.2 percent for May.

ONS director of economic statistics Liz McKeown said: "The economy grew strongly in May, with all the main sectors seeing increases. Many retailers and wholesalers had a good month, with both bouncing back from a weak April. Construction grew at its fastest rate in almost a year after recent weakness, with housebuilding and infrastructure projects boosting the industry."

The Bank of England may soon reduce interest rates, potentially next month, easing the burden on homeowners with high mortgage costs, reported The Guardian newspaper. However, recent comments from policymakers about ongoing inflation concerns have cast doubt on the outcome of the central bank's next meeting in August, leaving markets uncertain.

Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, said: "These GDP figures may make an August rate cut less likely by providing those rate setters, who are concerned about underlying price pressures, with sufficient confidence about the UK's economic recovery to continue putting off loosening policy."

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