UK economic growth slows in May

The UK's economy grew by 0.8% in May as coronavirus restrictions eased to allow pubs and restaurants to serve indoors.

This marked the fourth consecutive month of growth, but it was a slower rate than analysts had expected.

It was also a slowdown from April, when the economy grew 2% as restrictions eased for non-essential retailers and hospitality firms could serve outside.

The economy is still 3.1% below pre-pandemic levels, the Office for National Statistics said.

"Of course, the pace of the recovery was always going to slow as the economy climbed back towards its pre-crisis level. But we hadn't expected it to slow so much so soon," said Paul Dales, an economist with Capital Economics.

Pubs and restaurants "were responsible for the vast majority of the growth seen in May", said Jonathan Athow, ONS deputy national statistician for economic statistics.

"Hotels also saw a marked recovery as restrictions lifted," he added.

Accommodation and food services grew by a massive 37.1% in May, with the overall services sector growing 0.9%.

But UK carmakers struggled with a shortage of microchips, while construction firms were hit by very wet weather in May as firms lost working days, the ONS said.

British Chambers of Commerce head of economics Suren Thiru said: "While the latest figures confirm the rebound in economic activity continued into May, the sharp slowdown in growth suggests that the recovery is losing a little steam as the temporary boost, from the earlier phases of reopening, fades."

Looking ahead, Emma-Lou Montgomery, associate director at Fidelity International, said: "A sporting summer may not directly cause an 'it's coming home' bounce, but the impact on consumer confidence can't be ignored.

"That being said, there are many unknowns ahead. The UK is set on its roadmap to 'freedom day' but cases are rising, challenges in the labour market persist and the initial spending boom could slow in pace."