The UK economy unexpectedly contracted in May, marking the second month in a row of falling output, with GDP down 0.1% after a 0.3% fall in April.

Despite the drop over the three months to May, GDP was up 0.5%, according to official figures issued by the Office for National Statistics.

Production slumped 0.9% with many manufacturers having brought forward production to earlier in the year to beat tariffs. The service sector eked out 0.1% of growth, while retail sales disappointed.

Liz McKeown, director of economic statistics at the ONS, said: “The economy contracted slightly in May with notable falls in production and construction, only partially offset by growth in services.

“However, across the latest three months as a whole, the economy still grew. This reflected strength earlier in the year that resulted, in part, from some activity being brought forward to February and March.”

Chancellor Rachel Reeves said: “While today’s figures are disappointing, I am determined to kickstart economic growth and deliver on that promise.”

Danni Hewson, AJ Bell head of financial analysis, said: “After ‘Awful April’ the expectation was that the UK economy would have dusted itself off and at least managed to eke out a tiny amount of growth, but instead the country’s economic engine was stuck in reverse.”

She said there have been plenty of domestic issues to subdue the UK economy with spending on spring essentials being brought forward to much earlier in the year than would normally be the case. “People can only spend a pound once and there are only so many pot plants and BBQ accoutrements that any household needs.”

Ms Hewson said: “Changes to stamp duty which saw homebuyers rush to get purchases over the line before the deadline has resulted in a slump in the months after, although legal services have started to bounce back.

There was a glimmer of good news in the construction sector with new building work up 0.6%, bolstered by an increase in infrastructure projects. But that was offset by a fall in repair work to both homes and businesses which meant the sector overall contributed to the backward momentum.

Ms Hewson said: “If businesses aren’t growing and are putting investment and expansion plans on hold until they feel more confident, the weakness which seems to have become embedded in the UK economy will continue. There have been signs that confidence is improving slowly but it remains fragile, and the rest of the year looks set to be volatile.”

Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, said: “The UK’s growth trajectory in the near term is likely to tilt downwards as any uplift from higher consumer and Government spending is hampered by escalating business caution, amid fears of further tax rises in this autumn’s budget.

“The lack of momentum in the UK economy indicated by these sluggish figures means that an August interest rate cut currently looks inevitable, despite the recent spike in inflation.”