UK economy grew 0.8% in May as lockdown restrictions continued to ease
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THE UK economy grew by 0.8% in May as lockdown restrictions continued to ease.
It comes as hotels and cinemas reopened, while pubs and restaurants could welcome diners inside for the first time in months.
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Growth in gross domestic product (GDP) slowed from April though, when it grew by 2.3%, according to the Office for National Statistics (ONS).
In comparison, it expanded by 2.1% in March and by 0.4% in February.
Despite the recent growth, the economy still remains 3.1% below what it used to be before the coronavirus pandemic hit in February 2020.
Analysts had predicted that the economy would report a 1.5% increase for May.
What this means for your personal finances
GROSS domestic product (GDP) is one of the main indicators used to measure the performance of a country's economy.
When GDP goes up, the economy is generally thought to be doing well although today's figures aren't as strong as hoped.
Negative growth often brings with it falling incomes, job cuts and lower consumption.
The Bank of England (BoE) uses GDP as one of the key indicators when it sets the base interest rate.
This decides how much it will charge banks to lend them money, and is a way to try to control inflation and the economy.
So, for example, if prices are rising too fast, the BoE could increase that rate to try to slow the economy down. But it might hold off if GDP growth is slow.
The BoE cut interest rates twice in March due to coronavirus.
Base rate cuts means mortgage borrowers now typically benefit from lower rates, but at the other end of the scale savers earn less on their savings.
To measure GDP, the Office for National Statistics (ONS) collects data from thousands of UK companies.
The service sector grew by 0.9%, and accommodation and food services increased by 37.1% as restaurants opened for indoor dining.
On May 17, hotels and B&Bs also reopened alongside indoor entertainment and attractions, such as cinemas and museums.
It came after shops, gyms, hairdressers and non-essential shops reopened across England on April 12.
The hospitality sector could also welcome back customers for outdoor service in April following months of lockdown.
Jonathan Athow, ONS deputy national statistician for economic statistics, said pubs and restaurants were responsible for the "vast majority of growth" in May, although hotels also saw a marked recovery.
While Chancellor Rishi Sunak said: "It’s great to see people back out and about thanks to the success of the vaccine rollout, and to see that reflected in today’s figures for economic growth.
"The government is continuing to support the recovery, with the furlough scheme in place until September and schemes like Restart helping people who have sadly lost their jobs get back into work."
And Suren Thiru, head of economics at the British Chambers of Commerce (BCC), added: "The sharp slowdown in growth suggests that the recovery is losing a little steam as the temporary boost, from the earlier phases of reopening, fades.
“The UK economy remains on track for a strong rebound in the second quarter.
"However, economic activity may remain muted in June as the impact of rising covid infections and the delay to the end of the roadmap are felt, despite an uplift to consumer activity from Euro 2020."
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