ONS GDP data (May) – reaction from Govt high street and financial services experts

by | Jul 13, 2022

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This morning the latest monthly ONS economy stats were released, highlighting a Gross domestic product (GDP) growth of 0.5% in May 2022, after a decline of 0.2% in April 2022 (revised up from a 0.3% fall); UK GDP increased by 0.4% in the three months to May 2022, and by 3.5% in the 12 months to May 2022. 

Government High Streets Task Force expert and ShopAppy founder, Dr Jackie Mulligan: “Though this data is stronger than expected, it does highlight the immense strain the retail sector is under. The cost of living crisis is seeing consumers drastically rein in their spending, which is hitting the local shops that line our high streets very hard. Consumer-facing services like retail and hospitality are still below pre-pandemic levels, which is an ongoing cause for concern. More than ever, it’s important people shop local wherever possible. The UK high street, which is the fabric of entire communities, needs us more than ever right now.”

Rhys Schofield, managing director at Belper-based Peak Money: As much as doom and gloom shifts papers, when we talk to business owners they’re all rushed off their feet. Yes, there are some exceptionally strong headwinds but many British businesses are ready and raring to go. This is a clear sign to the Government that if they can just try not to do anything too stupid like picking a trade war with the EU, and help normal people through the cost of living crisis, the foundations of the economy are stronger than many think.”

Samuel Mather-Holgate of Swindon-based Mather & Murray Financial: This is good news for a government in turmoil. I certainly wouldn’t expect stellar growth over the next 12 months, but this is a promising sign that the UK economy is more resilient than analysts thought. Maybe we can avoid a technical recession, but it won’t feel like that to the average consumer. However, as a whole, the economy still faces strong headwinds. Inflation is currently 9.1%, but this is expected to go higher than 11%. Energy prices are also set to soar even higher than previously expected in the autumn and prices at the petrol pump have remained stubbornly high despite efforts to reduce the cost to motorists. With less money left in your wallet, you are hit again at the supermarket with the price of the average shop continuing to rise.”

Lewis Shaw, founder of Mansfield-based Shaw Financial Services: “Anyone thinking we’re out of the woods is in for a shock. It’s good news that GDP grew, but retail is down, as is consumer confidence overall. Both of those are a a real cause for concern. With the news that emerging market currencies are taking a hammering and the US Fed likely to hike rates by 0.75% again, we should get ready for the imminent 0.5% base rate rise in August from the Bank of England in the hopes of strengthening our currency. We’re caught between a rock and a hard place: hike rates to stop imports generating more inflationary pressure but sting mortgage holders, or leave them as they are and push up prices. Either way, we’re taking money out of people’s pockets when they can least afford it.”

David Robinson, chartered wealth manager at Wildcat Law: “This data provides some reason for optimism but storm clouds are still very firmly set on the horizon. Construction continues to grow with growth in both new construction and maintenance a positive. However producer input costs have risen to the highest levels since records began in 1985. These rises are already starting to feed through into rising prices and will continue to fuel inflation going forward. Businesses can only absorb costs for so long before they are forced to pass them on. Strap yourselves in, as this ride has only just started and it promises to be bumpier still.”

Graham Cox, founder of the Bristol-based broker, SelfEmployedMortgageHub.com: “The 0.5% GDP increase in May was largely driven by 0.4 growth in services, the dominant sector in the UK economy. But scratch beneath the surface and the ONS report reveals that most of this growth was down to a large rise in GP appointments. Alarmingly, retail trade fell 0.5% in May, highlighting just how fast consumer spending is falling. But there were also some encouraging signs. Manufacturing and construction grew 1.4% and 1.5% respectively, possibly boosted by the weaker pound and the still buoyant housing market.”

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