The UK’s economic recovery stumbled in May when growth slowed to 0.8% after a contraction in building work and a slump in car production.
It was the fourth consecutive month of GDP growth, and followed 2% growth in April,
However, the slowdown in May was much sharper than expected after economists had forecast a 1.5% increase. Covid rules had been relaxed so a bump to the economy was expected but never materialised.
The Office for National Statistics (ONS) said the manufacturing industry was hit by a shortage of computer chips that forced car companies to cut back production.
The ONS said: “Despite growth in consumer-facing services, it is travel, transport and other personal services that continue to contribute to output remaining below pre-pandemic levels.”
It comes as trade disruption could return if British holidaymakers head for European summer breaks as Dover warns of Brexit trade disruption as tourists hit Europe.
The head of the country’s biggest port said, calling on the government to urgently reconsider funding to redevelop Dover to prevent long-term damage.
It has left some to question whether the government should cancel the cut to Universal Credit and delay the increase in employer contributions to the furlough scheme.
The TUC’s general secretary, Frances O’Grady, said: “The chancellor must respond to the slowdown in growth to keep the recovery moving. Cutting support for families, and reducing support for employers too soon, are big risks. He should cancel the £20 cut to universal credit and delay the increase in employer contributions to the furlough scheme.”
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.”
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