UK economy grows by a slower-than-expected 0.8%

Analysts suggest initial enthusiasm for the reopening of shops has faded

Despite easing lockdown restrictions, the UK economy has grown at a slower-than-expected rate. Getty Images

The UK's economy grew for a fourth month running in May amid further easing of lockdown measures but the rate of expansion was lower than expected.

Office for National Statistics (ONS) data released on Friday showed gross domestic product output grew 0.8 per cent in May as hospitality venues welcomed customers back indoors for the first time since the end of last year.

However, that was down from April's 2 per cent growth rate. Analysts had forecast a slowdown to about 1.5 per cent in May.

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"The economy grew for the fourth consecutive month, albeit at a slower pace than seen recently, but remains around 3 per cent below its pre-pandemic peak," ONS deputy national statistician for economic statistics Jonathan Athow said.

"Pubs and restaurants, which were again able to welcome indoor guests, were responsible for the vast majority of the growth seen in May. Hotels also saw a marked recovery as restrictions lifted."

The ONS said output grew 3.6 per cent in the three months to May, thanks also to strong retail sales.

However, "May's weaker-than-expected increase in GDP underlines that the recovery to pre-Covid levels will be drawn out", said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

He said consumers' initial enthusiasm for the reopening of businesses had faded.

"Rising Covid-19 infections also appear to be prompting some people to work from home again and to visit shops and services venues less frequently."

Chancellor of the Exchequer Rishi Sunak said it was "great to see people back out and about thanks to the success of the vaccine roll out, and to see that reflected" in the GDP update.

The government on Thursday said UK residents returning to England from the US and most European countries will soon no longer have to isolate if they are fully vaccinated against Covid-19.

The quarantine change will start from July 19, when the government hopes to remove virtually all coronavirus restrictions in England.

Broader plans to ease social distancing, mask-wearing and other virus curbs come despite a surge in infections of the highly contagious Delta variant.

Prime Minister Boris Johnson argues that a successful UK vaccination campaign - which has seen nearly two-thirds of adults fully inoculated - has weakened the link between infections and hospital admissions and deaths.

However, a group of more than 120 scientists and medical professionals have criticised the unlocking plans, calling them a "dangerous and unethical experiment".

In a letter to The Lancet medical journal, they said the move could leave thousands with long-term illness owing to "long Covid".

Britain recorded nearly 32,600 Covid-19 cases on Wednesday, its highest daily number since January. It is already suffering one of the worst death tolls in Europe, with more than 128,000 fatalities.

Updated: July 9th 2021, 11:58 AM