The UK economy grew by 0.1% in May, official figures from the Office for National Statistics have shown, with warm weather lifting retail sales even as renewed conflict in the Middle East threatens to disrupt global supply chains and dampen business confidence.

The modest expansion, which builds on continued growth over the latest three-month period, was broadly welcomed by economists as evidence of underlying resilience — but was tempered by concern that the reading tells only part of the story for households and businesses alike.

Kevin Brown, savings expert at Scottish Friendly, said renewed strikes in the Middle East had "taken some of the shine off" what would otherwise have been a fairly positive set of figures. While the economy's ability to keep expanding was welcome, he cautioned that growth "on paper" would mean little to many households still grappling with volatile energy prices, inflation and the cost of everyday bills. The real test, he said, was whether the momentum could be sustained long enough to lift living standards and restore consumer confidence. He added that the figures were unlikely to shift the Bank of England's cautious stance on interest rates while inflation risks remained elevated, and suggested that households with a secure cash buffer might want to consider investing to protect their finances against rising costs amid the geopolitical uncertainty.

Business groups were similarly guarded. Ben Jones, senior economist at the CBI, said the pre-summer heatwave had supported retail and other consumer-facing sectors, but that the broader sectoral picture remained mixed, with the UK still struggling to build sustained momentum. He noted that CBI surveys had weakened in May and softened further in June, pointing to subdued private sector activity in the months ahead. Businesses, he said, remained cautious given uncertainty over the Autumn Budget and the prospect of a change in government, while the renewed military action in the Middle East underlined the risk of further volatility in energy and financial markets. He called on the incoming administration to tackle rising cost pressures on business, particularly industrial electricity prices, which he said were currently 45% higher than the G7 median.

Anna Leach, Chief Economist at the Institute of Directors, struck a starker note on the domestic policy environment. IoD data showed businesses were contending with sharply rising costs and weaker revenue prospects at a time when uncertainty had become normalised, she said, with the resilience measures firms were taking in response acting as a further drag on investment and hiring. She argued that government policy was adding to that uncertainty rather than easing it, and said the government's Industrial Strategy, while a potentially effective vehicle for growth, was falling short on pace and consistency. Ambitions to raise private investment could not be met, she warned, while the business tax burden continued to rise and speculation over capital taxes persisted. She called for a more pragmatic approach to the net zero transition, recognition that rising living costs for households stemmed in part from government-imposed costs on business, and more proportionate employment legislation.

Taken together, the reactions paint a picture of an economy inching forward but doing so against a backdrop of geopolitical shock, policy uncertainty and mounting cost pressures — with businesses and commentators alike warning that modest headline growth may struggle to translate into meaningful gains for household living standards.