“Despite the fall in retail sales in May, we expect household consumption to be a key driver of activity over the coming months. While household savings fell for the first time in two years, they remain in a relatively healthy state. Additionally, with wage growth remaining ahead of inflation and borrowing costs set to ease further, a modest pick-up in consumer spending could be on the cards in the second half of the year.
“Nonetheless, supply-side headwinds persist, and businesses continue to grapple with elevated labour costs, which have been felt most acutely in the hospitality and retail sectors. As a result, business investment is likely to slow in the coming quarters.
"GDP fell by 0.1% in May, driven by a decline in retail sales and further falls in manufacturing production. Forward looking surveys point to momentum gathering pace in the service sector, which is expected to offset weakness in manufacturing activity. Overall, we expect the UK economy to remain flat in the second quarter, easing fears of a potential recession.”
-ENDS-
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About KPMG
KPMG LLP, a UK limited liability partnership, operates across the UK with approximately 17,000 partners and staff. The UK firm recorded a revenue of £2.99 billion in the year ended 30 September 2024.
KPMG is a global organisation of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 143 countries and territories with more than 275,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.