The UK economy witnessed a growth of 0.4% as compared to zero growth in April. This will definitely bode well for new Labor Party Policy under PM Keir Starmer and Chancellor Rachel Reeves, which promises sustained growth. Regarding past challenges of inflation and cuts in spending by consumers, retail, construction, and manufacturing all showed big improvements.

The UK’s economy grew an encouraging 0.4% in May from a flat April. The Office for National Statistics announced this, which was double the quantum of growth experts anticipated. The economy had been lagging, especially the unfortunate situation back in April when bad weather kept people from spending money.

The new Labour government is transplanting policies to revive the economy, particularly after its massive electoral victory. Chancellor Rachel Reeves has worked tirelessly to ensure that Britain grows the strongest among major economies. Growth emerged in all sectors of the economy in May, from retail and construction to manufacturing. In that month, retailers did well as they made good recoveries from a weak April. Construction grew at the fastest rate almost for a year, cemented by housebuilding and infrastructure. Manufacturing also rose, especially in food and drink.

The economy grew by 0.9 percent between March and May, the highest growth in over two years. Prime Minister Keir Starmer entered at the time when the economy is rebounding from the short recession that happened late last year, fueled by people spending less due to the high cost of living.

Former Prime Minister Rishi Sunak said at the hustings that the economy was bouncing back beautifully under the Conservative government. In reality, the economy expanded 0.7% in the first quarter but faltered in April amid bad weather and ongoing cost-of-living pressures.

Prices are going up less quickly now at the government’s 2% target. This was far from being the case in October 2022, when it reached an overall 41-year high of 11.1%. As such, with inflation now at bay, interest rates could be cut by the Bank of England as early as next month. Lower interest rates could bring relief to people facing heavy mortgage costs.

The case, however, is that the Bank of England is going to be very cautious about it. A few officials are growingly afraid that one more rise in inflation can happen and hence are quite hesitant to cut rates too quickly. Suren Thiru, an economic expert, mentioned that the recent GDP numbers might in fact make the central bank less likely to act in August. A robust performance of the economy may cause policymakers to gain enough confidence for delaying monetary policy easing.

Chancellor Reeves sounded confident, saying that the government had indeed taken all measures to stabilize and improve the economy. She said they were only at the beginning of their efforts and doing everything possible to make improvements in different parts of Britain.

The service sector expanded by 0.3% in May, as this is the biggest part of the UK’s economy. It includes businesses such as retail, hospitality, and breweries. In May, there was a massive recovery in retail trade of 2.9%, after the fall in April. Hospitality recovered during this very month, especially in the case of the hotels, with restaurants and pubs registering smaller increases. On the other hand, breweries had an excellent month.

April was unusually rainy, with rainfall 155% above the average, whereas May was the warmest since the records began in 1884. The shift of weather dragged along impacts on significant economic activities.

Commenting on the latest forecast, Yael Selfin, chief economist at KPMG UK, acknowledged that near-term prospects for the economy had definitely improved but several long-term challenges remained. Notably, productivity in both the public and private sectors was still very weak. Supply-side reforms are planned by the new government—an quite optimistic point—but these would also take time to influence long-term growth.