UK GDP fell for the second consecutive month in May, revealing that the previous quarter's 0.7% growth was misleading. Anticipations for the second quarter indicate growth may just exceed zero, potentially remaining negative on a per capita basis. The slowdown reflects the unwinding of earlier growth boosts, particularly influenced by preemptive actions to avoid tariffs and changes in stamp duty. Rising employment costs and energy bills further hinder economic activity. However, business surveys hint that confidence might be stabilizing, suggesting that true growth could lie closer to 0.2-0.3% per quarter, potentially avoiding recession but falling short for public finance restoration.
The second successive monthly fall in UK GDP in May confirms that the strong growth of 0.7% reported in the first quarter was just a flash in the pan.
Growth in the second quarter is likely to be only just the right side of zero - and negative in terms of GDP per head.
Underlying growth is probably around 0.2-0.3% a quarter and an outright recession should be avoided.
Another negative shock in the Autumn Budget could easily be enough to tip the economy over the edge again.
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