The U.K. economy expanded more than anticipated in June, following two consecutive months of contraction, although overall growth slowed during the second quarter.
According to data released Thursday by the Office for National Statistics, gross domestic product increased by 0.3% from April to June, beating the forecast of 0.1%. This, however, marks a notable slowdown from the 0.7% growth recorded in Q1.
On a monthly basis, the economy grew 0.4% in June, recovering from a 0.1% decline in May and a 0.3% drop in April—the latter being the largest monthly fall since October 2023. The June rise also exceeded expectations of 0.1% growth.
Compared with the same period last year, the U.K. economy grew 1.2% in Q2, slightly down from the 1.3% annual increase seen in the first quarter.
Economists note that the slowdown partly reflects earlier distortions linked to U.S. tariffs announced in April, which prompted a surge in exports in the first quarter. That boost has since faded, weighing on growth. Additionally, business surveys indicate that government measures—such as higher taxes and an increased minimum wage—have put pressure on companies, affecting both output and hiring.
These figures could pose challenges for Chancellor Rachel Reeves, whose policies are aimed at stimulating economic growth during her first year in office. The economy had slipped into recession at the end of 2023 but rebounded in the first half of 2024. Growth, however, has remained modest since then.
Reeves is widely expected to implement further tax increases in her upcoming annual fiscal plan, scheduled for October or November, in an effort to keep government finances aligned with her fiscal targets.
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