UK economy shrinks again in May, raising new worries over outlook

Britain's economy contracted unexpectedly for a second month running in May, official data showed on Friday, compounding worries at home for finance minister Rachel Reeves as the nation navigates growing global turbulence.

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Gross domestic product shrank by O.l percent after a 0.3 per cent drop in April, the Office for National Statistics said.

Economists polled by Reuters had mostly forecast that gross domestic product would rise by O.l per cent from April's level. And while the services sector eked out a sliver of growth, declines in industrial output and construction dragged down overall output.

Following a growth surge early in the year, Britain's economy could now be facing flat or weaker growth than previously expected for the April-to-June period, economists said.

Friday's data now adds to expectations the Bank of England will cut interest rates next month.

"The lack of momentum in the UK economy indicated by these sluggish figures means that an August interest rate cut currently looks inevitable, despite the recent spike in inflation," said Suren Thiru, economics director at accountancy body ICAEW.

Prime Minister Keir Starmer's Labour government has struggled to improve growth meaningfully in its first year, with a tax hike on employers and US President Donald Trump's trade wars weighing on the economy.

Britain's goods exports to the United States - its single-largest export destination - surged earlier this year as US importers rushed to beat the imposition of Trump's tariffs.