UK economy contracts for second consecutive month

According to data from the UK Office for National Statistics, the country's GDP fell by 0.1% in May following a 0.3% decline in April. Experts surveyed by Bloomberg had expected a 0.1% increase. This has heightened concerns among analysts about the state of the British economy.

The GDP contraction also casts a shadow over Prime Minister Keir Starmer and Chancellor of the Exchequer Rachel Reeves actions. The negative statistics, coming after a series of other political setbacks, are significantly undermining confidence in their policies, Bloomberg notes.

The May figures put the UK economy at risk of stagnation in the second quarter. The country's GDP could even decline for the April-June period if production output fell by 0.4% or more in the previous month. The news agency’s experts note that the UK economy grew by 0.7% in January-March.

Meanwhile, the pound continues its decline against the dollar, dropping 0.3% following the GDP data release. However, market expectations regarding future interest rate cuts have remained virtually unchanged. Traders still believe the Bank of England will continue its monetary policy easing cycle in August.