UK economy grows as GDP rises 0.4% – what it means for your money

THE UK economy grew in May, the latest official figures show.

Gross Domestic Product (GDP) rose by 0.4% during the month following no growth in April, according to the Office for National Statistics (ONS).

GDP is a measure of the economic output of companies, individuals and governments.

It’s also a measure of how healthy and prosperous an economy is.

The latest figures will come as a boost to households after the UK economy shrunk at the end of last year.

Economists and forecasters are expecting the economy to grow slowly this year.

Director of economic statistics at the ONS 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.”

It comes after GDP grew by an estimated 0.7% in the first three months of 2024, after the UK economy fell into a small recession at the end of last year.

Services output grew by 0.3% in May, following growth of 0.3% in April, which the ONS said was the largest contributor to monthly GDP growth in May.

Production output also rose by 0.2% in May while construction output grew by 1.9% in the same month.

Luke Bartholomew, deputy chief economist at abrdn, said today’s GDP figures for May were “evidence of the UK continuing its solid recovery from a long period of stagnation”.

Chancellor Rachel Reeves added the Government’s “national mission” was delivering economic growth.

“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.”

It comes after the most recent figures from the ONS revealed the CPI measure of inflation slowed to 2% in May, hitting the Bank of England’s target.

What it means for your money

GDP is a measure of the economic output of companies, individuals and governments.

It’s also a measure of how healthy and prosperous an economy is.

If GDP is going up, it generally means people pay more in tax because they’re earning and spending more.

This means more money for the Government who can spend the extra cash on public services such as schools and hospitals.

When the economy shrinks, this can go in reverse, meaning households can see their standard of living drop.

If GDP falls, it means businesses struggle and may lay off staff from work as well.

How to protect your finances

Despite GDP growing, you might still be feeling the pinch from the higher cost of living.

But there are ways you can keep your cash safe.

Make sure you go through all your bank statements and accounts so you know what your income and outgoings are every month.

You can save money by moving to a cheaper mobile phone tariff or by axing subscriptions you don’t need like Netflix or Amazon Prime.

If you’ve got any outstanding debts, don’t ignore them as it will only make your financial situation worse.

Stay on top of what you owe and always repay priority debts.

There are plenty of organisations where you can seek debt advice for free.

You should also check what benefits you are eligible for as you might be able to claim without realising.

Entitledto’s free calculator works out whether you qualify for various benefits, tax credits and Universal Credit.

If you don’t want to register, consumer group moneysavingexpert.com and charity StepChange both have benefits tools powered by Entitledto’s data that let you save your results without logging in.

There is also emergency funding available for struggling households, which is dished out by local councils.

The Household Support Fund is designed to help those on a low income or benefits cover the cost of food, energy and general living costs.

What help is available varies depending on where you live as each council sets it own eligibility criteria.

It’s worth getting in touch with your local authority to see what you might be able to get.

You can find what council area you fall under by using the government’s council locator tool online.

Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.

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