UK economy shrinks as domestic and global pressures impact business activity - Chamber

The UK economy unexpectedly shrank by 0.1 per cent in May, according to figures released this morning.

It is the second month in a row that the economy has contracted, confounding predictions of analysts who expected to see slight growth.

The fall in economic output was mainly driven by a drop in manufacturing, the Office for National Statistics (ONS) said, while retail sales were “very weak”.

Oil and gas extraction was down, while car-making and the "often erratic" pharmaceutical industry were weaker, the ONS added.

Ruth Fleet (pictured), senior policy advisor at Greater Birmingham Chambers of Commerce, said: “Geopolitical uncertainty, particularly over the introduction of tariffs from the US administration, will have had an influence on the slowdown in economic growth, as well as businesses needing to negotiate the rise in National Insurance Contributions and adjustments to National Minimum and Living Wages, which came into effect in April.

“GDP growth is still quite weak but the West Midlands may begin to see a boost in economic growth following the announcements in the Government’s Comprehensive Spending Review in June.

“This included commitments to infrastructure projects, such as funding for the new tram route to the Sports Quarter in Birmingham, and an £86 billion pledge for R&D funding, which will undoubtedly benefit the West Midlands because of its leading research institutions.

“To help businesses kickstart growth, the Greater Birmingham Chambers of Commerce have created the Business Growth Studio.

“This toolkit focuses on the critical pillars of business growth, including essential tools, expert insights and practical workshops to help SMEs navigate the current landscape.”