UK economic growth slows to 0.3% in Q2, down from 0.7% in Q1, highlighting a challenging backdrop for Rachel Reeves ahead of the Budget. Danni Hewson, AJ Bell head of financial analysis, reacts to the latest figures.
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK GDP figures:
“There is no good news for the chancellor in this latest economic data, but there’s no worse news either.
“Official figures confirm that the growth spurt enjoyed by the UK economy at the start of the year did indeed start to peter out in the second quarter as a mix of global and domestic headwinds blew through.
“A big push by manufacturers to get goods over to customers in the US ahead of Donald Trump’s tariffs and a rush to complete house purchases before changes to stamp duty came in both helped lift the economy in the first three months of 2025. But that came at a cost to later months as some of the activity which would otherwise have happened in April, May or June was brought forward.
“Households were also showing restraint when it came to their own finances, with the savings ratio ticking up in the second quarter as people looked to create a cushion amid concerns about a weakening jobs market.
“What will be heartening for Rachel Reeves is the revision to 2024 data, which showed that growth during Labour’s first months in government was chunkier than had been previously thought, though growth as a whole last year was limited to 1.1%.
“Even with all the challenges, negativity and speculation about tough decisions to come in November’s Budget, the UK economy is proving resilient and it is forecast to grow by around 1.3% over the course of the full year.
“It’s not the kind of growth that the government would like, nor is it the kind of growth that will change those tough decisions, but it is still growth.”
