The UK economy expanded last month as it continues its recovery from the damage inflicted on it by Covid and measures to contain the virus, new figures released today show.
GDP rose 0.8 per cent in May 2021, the fourth consecutive month of growth, according to the ONS.
The expansion was driven by a resurgence in the services industry, which represents a large proportion of the UK economy.
The accommodation and food service sector grew by rapidly by 37.1 per cent in May, triggered by a burst in consumer spending after restrictions on indoor dining were lifted in the middle of the month.
The success of the UK’s vaccination programme has lifted consumer confidence, prompting people to ramp up spending as concerns over Covid’s lingering impact on the economy eased.
High levels of savings built up during the pandemic also provided households with money to splurge on goods and services that have been unavailable for month due to Covid curbs, analysts said.
Poor output levels in the travel and transport sectors put downward pressure on GDP growth in the services industry, the ONS said.
The services industry is estimated to represented 80 per cent of the UK’s total output.
Overall output is now just 3.1 per cent below pre-pandemic levels, up from 3.7 per cent in April.
Willem Sels, chief investment officer private banking and wealth management at HSBC, says: “Economic growth was boosted by the gradual further lifting of restrictions, including indoor dining and sporting events.”
“UK services are getting the biggest boost from the reopening, as consumers are eager to get back to normal. The savings ratio has been twice as high than the historical average for 12 months now, and we believe consumers will want to spend some of the savings accumulated during lockdowns” he added.