The UK economy grew faster than expected in June after two months of contraction, but expansion still slowed in the second quarter of the year.
Data released earlier on Thursday by the Office for National Statistics showed that the UK’s gross domestic product (GDP) grew by 0.3% between April and June, higher than the 0.1% growth forecast but still significantly slower than the 0.7% growth seen in the first quarter.
The country’s economy also grew by 0.4% in June on a monthly basis, an improvement on the 0.1% contraction in May and the 0.3% decline in April, which was the biggest drop since October 2023. This also exceeds the expected growth of 0.1%.
On an annualised basis, the UK economy grew by 1.2% in the second quarter, down from 1.3% growth in the first three months of the year.
The slowdown in the second quarter partly reflects distortions caused by US President Donald Trump’s announcement of tariffs in April, as exporters rushed to ship goods to the US in the first few months of the year. But this has probably since fallen, weighing on growth.
Business surveys also showed that the government’s own measures, such as higher taxes and a higher minimum wage, are putting pressure on businesses, hitting job creation and dampening output.
These figures will be difficult for Chancellor Rachel Reeves, given that they cover the end of her first year as head of the economy, and she has repeatedly stated that her “number one goal” is to “kick-start economic growth.”
The economy fell into recession at the end of 2023 but recovered in the first half of 2024. Since then, growth has been sluggish.
Nevertheless, it is widely expected to raise taxes for a second consecutive year to get the government back on track and meet her fiscal rules when she presents her annual tax and spending plan in October or November.
