The UK’s economy jumped back to growth in May, official figures showed on Thursday in good news for new Chancellor Rachel Reeves just days into the job.
GDP was up by 0.4 per cent in that month, according to figures from the Office for National Statistics.
This compared to the economy flatlining, with no growth, in April, according to data which was published shortly before the general election.
Responding to the latest figures, Ms Reeves said: “Delivering economic growth is our national mission, and we don't have a minute to waste. That is why this week I have already taken the urgent action necessary to fix the foundations of our economy to rebuild Britain and make every part of Britain better off.
“A decade of national renewal has begun, and we are just getting started.”
The 0.4 per cent growth was twice as good as expected by the City.
Rob Wood, chief UK economist at Pantheon Macroeconomics, said: "The UK economy is well and truly putting last year's minor recession behind it.
"GDP has risen 1.5 per cent so far this year, and three-month-on-three-month growth reached the highest since January 2022.
"But these growth numbers feel a bit too good to be true - they are much stronger than business surveys - so we assume some payback in June."
The services sector remained a key driver for economic growth across the UK, the ONS said, with its fifth consecutive monthly increase.
Retailers had a particularly strong month, reporting a 2.9 per cent increase in trade for May as they rebounded from a 1.8 per cent decline the previous month in the face of poor weather.
Accommodation and food services, which includes hotels and restaurants, was another strong performer, with 2.4 per cent growth.
Elsewhere, the construction industry saw output grow by 1.9 per cent, with an increase in both new work and maintenance.
Despite the rebound, the sector still contracted over the three months to May as it continues to face pressure from high interest rates.
But the stronger-than-expected performance in May puts the country's economy on track to surpass the Bank of England's projection of 0.5 per cent growth for the second quarter, barring a notable decline in June.
Economists had predicted that GDP would increase by 0.2 per cent in May.
ONS director of economic statistics Liz McKeown said: "The economy grew strongly in May, with all the main sectors seeing increases.
"Many retailers and wholesalers had a good month, with both bouncing back from a weak April.
"Construction grew at its fastest rate in almost a year after recent weakness, with housebuilding and infrastructure projects boosting the industry."
However, the strong growth may delay the Bank of England’s Monetary Policy Committee from cutting interest rates.
Suren Thiru, economics director at accountants group ICAEW, said: “These figures confirm a robust rebound in economic activity as stronger services and construction output helped return the economy to growth.
“These GDP figures may make an August rate cut less likely by providing those rate setters, who are concerned about underlying price pressures, with sufficient confidence about the UK’s economic recovery to continue putting off loosening policy.”
However, he also stressed: “May’s GDP uptick may well have been followed by a June washout, with wet weather likely to have stifled outputfrom key sectors of the economy, despite a helping hand to hospitality and some retailers from Euro 2024.
“Longer-term, the new government faces an uphill struggle to achieve its ambition to significantly uplift the UK’s growth trajectory, unless it can substantially increase productivity and tackle economic inactivity.”
The new Government is banking on boosting economic growth to plough billions more into public services.
But leading economists have warned that if healthier growth does not materialise, the Government may have to hike taxes further or cut some unprotected public services such as local government, or the prisons and justice system.
