UK economy grows but fears remain over rising prices

The UK economy rebounded in May after shrinking in April and March, official figures show.

The economy grew by 0.5% during the month, the Office for National Statistics (ONS) said, higher than the flat growth most economists expected.

Every area of the economy expanded including construction, travel, and manufacturing.

However, businesses reported that higher running costs had led to them to put up prices for customers.

And with household disposable incomes set to fall further in the autumn when energy prices are set to rise again, there is “still a real risk” that the economy could fall into a recession, said Paul Dales, chief UK economist at Capital Economics.

Both businesses and households are being hit by rising prices, which are surging at their fastest rate for 40 years due to record-high fuel and energy costs.

UK inflation, the rate at which prices rise, hit 9.1% in May, and is expected to reach 11% later this year.

Andrew Bailey, the governor of the Bank of England, has vowed to bring inflation down to its target of 2%, “no ifs or buts”. It has raised rates five times since December and is expected to put them up again next month. He has indicted the Bank will “act forcefully” suggesting it could raise rates by more than 0.25%.

The rise in the cost of living has led to unions calling for pay rises to help workers cope. Several industries, such as the railways, have seen workers strike over pay.

But the government has warned against employers handing out big increases in salaries over fears of a 1970s-style “inflationary spiral”, where firms hike wages and then pass the cost on to customers via higher prices.

Economy rebounds

Darren Morgan, director of economic statistics at the ONS, said the UK economy had “rebounded” in May – with growth across the main sectors, including construction which saw a rise in housebuilding and office refurbishments.

“Health was the biggest driver with many more people seeing GPs, despite test and trace and the vaccination programs winding down,” he added.

Mr. Morgan added that road haulage also had a “busy” May, while travel agencies saw a jump in demand as people booked summer holidays.

However, while the economy grew, many businesses reported that an increase in fuel and electricity costs had forced them to put up their prices for customers.

The UK’s statistics body also cited price increases for metals, some foods, including fish, and other staples.

The new chancellor, Nadhim Zahawi – who is in the race to be the next Conservative Party leader and prime minister – said it was “great” to see the economy growing but added that he knew people were concerned about rising prices.

“We’re working alongside the Bank of England to bear down on inflation, and I am confident we can create a stronger economy for everyone across the UK,” Mr. Zahawi said.

Like this article? Share on

Facebook
Linkdin
Twitter
Telegram
WhatsApp

Related articles

Information about our own complaints process, raising concerns to the Legal Ombudsman and to us

We want to give you the best possible service. However, if at any point you become unhappy or concerned about the service we provided then you should inform us immediately, so that we can do our best to resolve the problem.

In the first instance it may be helpful to contact the person who is working on your case to discuss your concerns and we will do our best to resolve any issues at this stage. If you would like to make a formal complaint, then you can read our full complaints procedure here. Making a complaint will not affect how we handle your case.

The Solicitors Regulation Authority can help you if you are concerned about our behaviour. This could be for things like dishonesty, taking or losing your money or treating you unfairly because of your age, a disability or other characteristic. 

You can raise your concerns with the Solicitors Regulation Authority.

What do to if we cannot resolve your complaint

The Legal Ombudsman can help you if we are unable to resolve your complaint ourselves. They will look at your complaint independently and it will not affect how we handle your case.

Before accepting a complaint for investigation, the Legal Ombudsman will check that you have tried to resolve your complaint with us first. If you have, then you must take your complaint to the Legal Ombudsman:

  • Within six months of receiving our final response to your complaint; and,
  • Within one year of the date of the act or omission about which you are concerned; or
  • Within one year of you realising that there was a concern.

 

If you would like more information about the Legal Ombudsman, you can contact them at the following details:

 Contact details

This website uses cookies to ensure you get the best experience on our website. By closing this message, you consent to our cookies on this device in accordance with our cookie policy unless you have disabled them.