UK growth slows in second quarter but comes in higher than expected

Key Points

• The UK economy grew by 0.3% in the second quarter, which was higher than the expected 0.1% rise but lower than the 0.7% increase in the first quarter.
• This unexpected growth is seen as positive news for the Labour government, which regards improving the economy as its top priority since returning to power in July 2024.
• Higher growth could lead to increased tax revenues, potentially easing the pressure on Treasury chief Rachel Reeves to raise taxes further this fall.
• Critics point fingers at Reeves for the UK’s sluggish economic performance, citing her previous pessimism and the impact of higher taxes on businesses.

LONDON (AP) — Britain's economy slowed down during the second quarter of the year in the face of higher taxes on businesses and global tariff uncertainties, but growth came in higher than anticipated, official figures showed Thursday.

The Office for National Statistics said output expanded by 0.3% during the second quarter from the previous three-month period, largely as a result of a strong performance in June.

Though that was lower than the 0.7% increase in the first quarter of the year, it was ahead of market expectations of only a 0.1% rise.

The bigger than expected increase will be welcome news to the Labour government, which has made improving growth its number one priority since it returned to power in July 2024.

Higher growth will also bolster public finances as it leads to higher tax revenues. If growth continues to beat expectations in coming months, Treasury chief Rachel Reeves will be under less pressure to deliver another big tax-raising budget this fall.

Reeves said Thursday's figures were “positive” but added that there is “more to do” to drive growth in the economy.

The British economy, the sixth-largest in the world, has underperformed its long-run average since the global financial crisis of 2008-9. Critics say Reeves is partly responsible for much of the gloomy economic news since Labour returned to power after 14 years, because she was overly downbeat when taking on her role and has increased taxes, particularly on businesses.