UK Economy Returns To Growth In May, It’s Going To Break Expectations

The U.K. economy saw a growth of 0.4% in May, according to the Office for National Statistics. This increase surpassed the 0.2% forecast by economists in a Reuters poll. The British pound rose to a four-month high against the U.S. dollar following this news.

After exiting a shallow recession in the first quarter, the economy flatlined in April but showed signs of recovery in May. The services sector, the backbone of the U.K. economy, grew by 0.3%. Production and construction sectors also rebounded, with production rising by 0.2% and construction by 1.9%.

By 7:17 a.m. in London, the pound stood at $1.2859, the highest since March 8, 2024, based on LSEG data. This broad-based recovery is a positive sign for the newly-elected Labour Party, as Prime Minister Keir Starmer begins his tenure.

Goldman Sachs recently upgraded its growth forecast for the U.K., attributing it to Labour’s strong election victory. The party's focus on economic growth, housing, and planning resonated with voters. Analysts view the new government as supportive of U.K. assets due to its business-friendly approach.

This growth news is a significant boost for the U.K. economy, signaling a positive outlook under the new administration.