LONDON - Britain’s economy unexpectedly contracted for a second month in a row in May, official data showed on July 11, in a blow to Britain’s Labour government as it seeks to kickstart growth.

Gross domestic product shrank 0.1 per cent in May, following a 0.3 per cent contraction in April, the Office for National Statistics (ONS) said in a statement. Economists had expected growth of 0.1 per cent.

The figures add to problems faced by Prime Minister Keir Starmer and his Labour government as it battles global uncertainty over US tariffs and elevated inflation.

The government’s spending plans depend heavily on economic growth, especially after fiscal setbacks caused by its U-turns on welfare cuts and winter fuel payments for millions of pensioners.

Finance minister Rachel Reeves called the figures “disappointing” and said there is “more to do.”

To kickstart the economy, Labour has pledged to cut red tape and launched a multi-billion pound investment plan focused on the ailing National Health Service (NHS) and crumbling infrastructure.

Separate ONS data on July 11 showed that Britain’s exports to the United States rose by £300 million (S$520.5 million) in May, following a record drop in April when President Donald Trump’s tariffs kicked in.

“Growth is becoming incredibly difficult to achieve for the government,” said Lindsay James, investment strategist at Quilter.

“The plans put in place so far are unlikely to move the needle in the absence of improving business and consumer sentiment in an environment of ongoing cost pressures,” she added.

ONS director of economic statistics Liz McKeown noted that there were “notable falls in production and construction” that impacted GDP in May.

She said the fall in production was driven by “oil and gas extraction, car manufacturing and the often-erratic pharmaceutical industry.” AFP

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