LIVING standards continue to be squeezed as official figures today showed the economy fell unexpectedly in May rounding off Rachel Reeves’s problematic first year as chancellor.

The Office for National Statistics (ONS) revealed gross domestic product (GDP) contracted by 0.1 per cent in May, following a 0.3 per cent drop in April.

Ms Reeves said that the figures were “disappointing” but renewed her pledge to boost economic growth.

She said: “Getting more money in people’s pockets is my number one mission.

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

TUC general secretary Paul Nowak said that turning around the economy was “never going to be an overnight job.”

“After a positive start to the year our economy remains fragile,” he said.

“Global pressures and high household costs are both hitting growth. 

“Turning things around was never going to be an overnight job. But this government is taking the right steps by investing in public services and infrastructure. 

“The Bank of England must play its role too by cutting interest rates faster, to give families and businesses the breathing room they need to spend and invest.”

Experts said the weak May figure reinforces views that the Bank of England will cut interest rates again in August.

The ONS data shows that GDP was weighed on by the manufacturing sector, which suffered another steep decline in activity and falling construction output.

Activity in the manufacturing sector dropped by 1 per cent — the biggest decline since July last year — following a steep 0.7 per cent fall in April, having surged earlier in the year as US importers stocked up before US President Donald Trump’s tariff rises, which came into effect at the start of April.

The construction sector also contracted by 0.6 per cent in May in a sharp reversal of 0.8 per cent growth in April.

ONS director of economic statistics Liz McKeown said that “notable falls in production and construction” were only partially offset by growth in services in May.

She added: “While services grew overall in May with a strong month for legal firms, which recovered from a weak April, and computer programming, these were partially offset by a very weak month for retail sales.”