UK economy grows by 0.3% in Q2, exceeding expectations

The UK’s economy expanded by 0.3% in the second quarter of 2025, surpassing the 0.1% growth anticipated by economists and the Bank of England. This follows a robust 0.7% increase in the first quarter, indicating a continued positive trend.

In June alone, the economy grew by 0.4%, rebounding from a 0.1% decline in May. This monthly growth was driven by strong performances in services, industrial output, and construction. The services sector, in particular, saw a 0.4% increase, led by computer programming, health, and vehicle leasing.

On an annual basis, the UK’s GDP rose by 1.2% in the second quarter, exceeding the forecasted 1.0% growth. This annual growth was supported by a 1.2% increase in construction, driven by new infrastructure projects and private housing repairs, and a 0.4% rise in services.

Despite the positive growth figures, challenges remain. The economy faces headwinds from global trade uncertainties, particularly due to increased U.S. import tariffs, and a slowdown in hiring at home, partly reflecting higher employment taxes and a significant increase in the minimum wage.

Chancellor Rachel Reeves acknowledged the positive data but emphasized the need for continued efforts to ensure the economy works for all citizens. She noted that while the British economy has the key ingredients for success, it has felt stuck for too long.

Looking ahead, the International Monetary Fund projects the UK’s economy will grow by 1.2% in 2025 and 1.4% in 2026, slightly ahead of the eurozone and Japan but trailing behind the U.S. and Canada.

Overall, while the UK’s economy has shown resilience in the face of global challenges, ongoing efforts are necessary to sustain and build upon this growth trajectory.