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| UK economy posts surprise 0.3% growth in three months to June | UK economy posts surprise 0.3% growth in three months to June |
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| GDP figure slower than previous quarter but beats expectations thanks to 0.4% expansion in June | GDP figure slower than previous quarter but beats expectations thanks to 0.4% expansion in June |
| Business live – latest updates | Business live – latest updates |
| Bounceback may be under way but Reeves cannot relax | Bounceback may be under way but Reeves cannot relax |
| The UK economy grew at a faster rate than expected in the second quarter, official figures show, despite a slowdown from a strong start to the year amid pressure from tax increases and Donald Trump’s global trade war. | The UK economy grew at a faster rate than expected in the second quarter, official figures show, despite a slowdown from a strong start to the year amid pressure from tax increases and Donald Trump’s global trade war. |
| Figures from the Office for National Statistics (ONS) showed growth in gross domestic product slowed to 0.3% in the three months to the end of June, down from a rate of 0.7% in the first quarter. | Figures from the Office for National Statistics (ONS) showed growth in gross domestic product slowed to 0.3% in the three months to the end of June, down from a rate of 0.7% in the first quarter. |
| Although it beat forecasts for a slowdown to 0.1% growth made by City economists and the Bank of England, the latest snapshot underscores the challenge for the chancellor, Rachel Reeves, as she considers options for boosting the economy and raising revenues at her autumn budget. | |
| Liz McKeown, an ONS director of economic statistics, said: “Growth slowed in the second quarter after a strong start to the year. The economy was weak across April and May, with some activity having been brought forward to February and March ahead of stamp duty and tariff changes, but then recovered strongly in June.” | Liz McKeown, an ONS director of economic statistics, said: “Growth slowed in the second quarter after a strong start to the year. The economy was weak across April and May, with some activity having been brought forward to February and March ahead of stamp duty and tariff changes, but then recovered strongly in June.” |
| The latest snapshot showed the economy grew 0.4% in June, a faster rate than expected after two consecutive months of shrinking output. The ONS also revised its initial estimate for April’s GDP contraction from -0.3% to -0.1%. | |
| Reeves said the quarterly figures were positive as they showed Britain had recorded a strong start to the year and continued growth in the second quarter, “but there is more to do to deliver an economy that works for working people”. | |
| She said: “I know that the British economy has the key ingredients for success but has felt stuck for too long.” | |
| According to the latest snapshot, growth in the second quarter was led by the country’s dominant services sector expanding by 0.4%, with computer programming, health and vehicle leasing driving activity. | According to the latest snapshot, growth in the second quarter was led by the country’s dominant services sector expanding by 0.4%, with computer programming, health and vehicle leasing driving activity. |
| Construction output rose by 1.2%, supported by large infrastructure projects. Manufacturing grew by 0.3%, after growth of 1.1% in the first quarter when companies had rushed to beat the introduction of Trump’s tariffs. | Construction output rose by 1.2%, supported by large infrastructure projects. Manufacturing grew by 0.3%, after growth of 1.1% in the first quarter when companies had rushed to beat the introduction of Trump’s tariffs. |
| The chancellor is preparing for a difficult autumn budget amid mounting speculation over tax rises, as a weaker growth outlook, higher debt interest payments and a series of U-turns on welfare cuts contribute to a yawning deficit in the government finances that is estimated to be more than £40bn. | |
| Reeves has pledged to use the set-piece fiscal event to prioritise fixing Britain’s dismal productivity record, using an exclusive article in the Guardian to downplay speculation over tax rises. | Reeves has pledged to use the set-piece fiscal event to prioritise fixing Britain’s dismal productivity record, using an exclusive article in the Guardian to downplay speculation over tax rises. |
| However, the economy faces headwinds from Trump’s trade war and a sluggish domestic outlook. The UK had recorded the fastest growth rate in the G7 in the first quarter but despite beating forecasts for the three months to June, growth still slowed. | However, the economy faces headwinds from Trump’s trade war and a sluggish domestic outlook. The UK had recorded the fastest growth rate in the G7 in the first quarter but despite beating forecasts for the three months to June, growth still slowed. |
| Business leaders said the economy had been dented by the chancellor’s £25bn increase in employer national insurance contributions and said more tax rises would cause further drag. | |
| “Without thriving firms the economy will continue to struggle,” said Stuart Morrison, the research manager at the British Chambers of Commerce. | “Without thriving firms the economy will continue to struggle,” said Stuart Morrison, the research manager at the British Chambers of Commerce. |
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| “Tax burdens at home, alongside uncertain global trading conditions, created a very challenging environment for the UK’s small and medium-sized enterprises in the second quarter.” | |
| The latest figures showed business investment fell by 4% in the second quarter, although it was 0.1% higher than a year earlier. | The latest figures showed business investment fell by 4% in the second quarter, although it was 0.1% higher than a year earlier. |
| Mel Stride, the shadow chancellor, said: “Any economic growth is welcome, but with business leaders saying that all indicators are flashing red, and key economists warning that Rachel Reeves has created a £50bn black hole in the public finances, Rachel Reeves’s economic vandalism is clear.” | |
| The stronger-than-expected second quarter could complicate the Bank of England’s path to cutting interest rates. The pound rose slightly against the US dollar. | |
| Threadneedle Street had forecast a slowdown to 0.1% in the second quarter. Last week it warned that continued growth and rising inflationary pressures driven by the soaring price of food could force it to delay further cuts to borrowing costs. | Threadneedle Street had forecast a slowdown to 0.1% in the second quarter. Last week it warned that continued growth and rising inflationary pressures driven by the soaring price of food could force it to delay further cuts to borrowing costs. |
| Nicholas Hyett, the investment manager at Wealth Club, said the figures raised “some interesting questions” for the Bank after it cut its key base rate from 4.25% to 4% last week. | Nicholas Hyett, the investment manager at Wealth Club, said the figures raised “some interesting questions” for the Bank after it cut its key base rate from 4.25% to 4% last week. |
| “Better leave the economy sputtering into life than risk turbocharging price rises with further interest rate cuts,” he said. |