Britain’s economic recovery slowed in May despite improved health situation

Britain’s gross domestic product grew by 0.8% in May, well below forecasted 1.5% growth and downwardly revised April’s figure at 2%, signaling sharp slowdown in post-pandemic economic recovery.

Economists anticipated that the pace of recovery was going to slow as the economy returned closer to its pre-pandemic levels but results in May were much weaker than expected.
However May’s 0.8% growth rate was still faster that typical monthly GDP rise during the period before pandemic.

Although the economy grew each month between February and May, the gross domestic product was still 3.1% smaller at the end of May, compared to February 2020, before the coronavirus pandemic hit the country.

Acceleration in re-opening in Britain’s dominant services sector resulted in 37.1% monthly jump for accommodation and food services, while the whole sector grew by 0.9% in May.

Industrial production grew by 0.8%, as chip shortage affected carmakers, resulting in the biggest fall in production in one year.

Construction sector contracted by 0.8% in May, hit by bad weather, as May was the fourth rainiest since 1862.

The Bank of England expects Britain’s economy to grow by 7.25% in 2021 that would be the fastest annual growth since 1941, after the economy plunged nearly 10% during pandemic in 2020.

British government plans to lift most of remaining restrictions from a third lockdown on July 19, as vaccination process accelerated, but economists are divided, as some expect that lifting restrictions would contribute to strong growth in the third quarter.

On the other side, many economists fear that acceleration in new cases of Delta variant of the coronavirus would hurt economic recovery and lead to further growth slowdown.