The UK economy returned to growth in May 2026, with gross domestic product expanding 0.1%, reversing a 0.1% contraction in April, according to the Office for National Statistics. The figure matched the median forecast in a Reuters poll of economists. Services sector output expanded 0.3% during the month, partly offset by falls of 0.5% in production and 0.8% in construction.

ONS director of economic statistics Liz McKeown said the economy recorded 'robust' growth in the three months to May, though she noted the pace eased slightly as the latest two months showed a weaker picture [Source: The Guardian]. McKeown said services drove growth across the three-month period, with computer programming and advertising leading the way, while the pharmaceutical industry also performed well. GDP grew 0.7% in the three months to May 2026, following revised growth of 0.8% in the three months to April.

Bloomberg characterised the May growth as unexpected, suggesting consumers and businesses were more resilient than feared amid political turbulence and higher energy prices [Source: Bloomberg]. Sterling stood at €1.16 against the euro in May, up 0.4% from April, while CPI annual inflation held steady at 2.8%, unchanged from the prior month.

The April contraction had been the first monthly GDP fall for eight months and was seen as a sign that the Iran war was beginning to take its toll on the economy. Energy prices fell sharply following a memorandum of understanding between the US and Iran to end the conflict — an earlier development that predated the May data period — though prices remained higher than before the conflict began. The government is seeking to address high industrial energy prices through the British Industrial Competitiveness Scheme, which is not due to start until April 2027. The May GDP data follows UK growth of 0.6% in the first quarter of 2026, which was led by broad-based increases across the services sector, according to ONS preliminary figures [Source: CNBC].

Separately, the UK government confirmed that British Steel has been brought into public ownership following the Steel Industry (Nationalisation) Act 2026 receiving royal assent. Business Secretary Peter Kyle said the decision was made to nationalise British Steel to secure steelmaking capability and maintain production in the national interest. British Steel was previously owned by Chinese company Jingye.

Sources: The Guardian, Reuters, Bloomberg, BBC Business, PA Wire, Irvine Times, UK Parliament Research Briefing, CNBC