UK economic growth slows to 0.3% in second quarter of the year, latest figures show
It's a reduction from the 0.7% growth reported in the first quarter of the year. However, the latest figures are an improvement on some economists' predictions, who were estimating growth could be as low as 0.1%.
Growth in the latest quarter was driven by increases of 0.4% in services and 1.2% in construction, while the production sector fell by 0.3%, the ONS said.
The ONS also noted that some activity was brought forward to February and March, ahead of stamp duty changes in April and announced US tariff changes, which could have contributed to the slowed growth.
ONS director of economic statistics Liz McKeown said: "Growth slowed in the second quarter after a strong start to the year."
"The economy was weak across April and May, with some activity having been brought forward to February and March ahead of stamp duty and tariff changes, but then recovered strongly in June."
"Across the second quarter as a whole, growth was led by services, with computer programming, health and vehicle leasing growing."
The latest figures showed the UK economy grew by 0.4% in June, a welcome boost after the economy contracted by 0.1% in both April and May.
The chancellor accepted there was more to do when it came to improving people's living standards.
Chancellor Rachel Reeves said: "Today's economic figures are positive with a strong start to the year and continued growth in the second quarter.
"But there is more to do to deliver an economy that works for working people."
"I know that the British economy has the key ingredients for success but has felt stuck for too long."
"That is why we're investing to rebuild our national infrastructure, cutting back on red tape to get Britain building again and boosting the national minimum wage to make work pay."
"There's more to do and today's figures only fuel my ambition to deliver on our plan for change."
Shadow Chancellor Mel Stride, who referred to Reeves as an "economic vandal" on X, accused the chancellor of failing in her role and "taxing your future to fund her failure."
Speaking on Thursday morning, he claimed the slowing rate of growth was a result of Labour's tax increases on businesses and repeated the Conservative's claim that further tax rises are inevitable in the chancellor's autumn budget.
Today's 0.3% growth figures match the rise seen during the same period under the Conservatives.
The slowdown in the economy could increase the likelihood of further interest rate cuts by the Bank of England after last week's reduction to 4%.
However, the chancellor has been relying on accelerating growth to help fund future government spending plans.
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Spectator
23 minutes ago
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It's time to take back Afghanistan from the Taliban
Friday 15 August is a painful anniversary for Afghanistan – it is four years since the Taliban took Kabul, turning my country into the worst place in the world to be a woman, and once again a safe haven for terrorists. For Afghans who fled to neighbouring countries in fear for their lives the situation has recently become dramatically worse. Iran had already pushed back hundreds of thousands of Afghan refugees across the border. Since its 12-day war with Israel, it has significantly increased the expulsions, alleging that Afghans helped Mossad's operations inside Iran. Many of those being forcibly returned are soldiers who fought for the Afghan republic. They will face persecution from the Taliban on their return. As a commander of Afghan forces who fought for our nation during the Republic it is my moral duty to change this. I am part of a new generation of Afghan leaders who grew up with the hope of a free, prosperous and self-reliant Afghanistan. But our people have been abandoned by a world gripped by other crises. To fix this, I am proud to have been chosen as leader of the Afghanistan United Front, a democratic political organisation set up in opposition to the Taliban. We can mobilise many thousands of young men and women who are ready to fight for change in Afghanistan, to live independently and with dignity in our own country. We have the strategy and the leadership to change Afghanistan for the better. And this time we will do it without international boots on the ground. But we need material help: billions of dollars of Afghan government reserves are frozen in America. If the United States gave us access to our own money, we could finance a campaign to create a safe haven for women, minorities, and returning refugees – and ultimately free our country. The world needs a partner in Afghanistan, and it is not the Taliban. The only solution is to conduct a military campaign, launched inside Afghanistan, which will include conventional attacks, guerrilla operations, and targeting of Taliban leaders. With the right support we can end the terrorist threat from Afghanistan, stem the flow of refugees, and open Afghanistan for global business. The Taliban are currently handing over Afghanistan's mineral wealth to China, but it does not have to be this way. Britain could take a bigger role in helping the Afghans fight for freedom without having to wait for America. Britain has the political clout and capacity, and it is in her strategic interest and in line with British values to help its Afghan allies take on the Taliban. It is also the best way to stop Afghans on small boats crossing the channel. We are grateful to everyone in Europe, Canada, America, Australia, and elsewhere who have hosted us in these dark times. All the Afghans I speak to want to go home and live in Afghanistan. But what is missing is any support for building a different future to the dark horrors of the Taliban. Instead western countries are moving towards recognition of the Taliban. This short-sighted approach will end in failure. It will not only fail to resolve the refugee crisis, but will leave Afghanistan in the hands of a brutal Islamist dictatorship that represents only a small fraction of the Afghan people and constantly imposes new restrictions on the lives of women. Apart from the continuing pressure of refugees, Afghanistan under the Taliban is a threat to the world as a crucible of terrorism. As several international reports have shown, the Taliban have close links to al-Qaeda: Afghanistan is now once again the group's effective international headquarters. The Taliban have also given safe haven and training to thousands of Central Asian terrorists, who are planning attacks outside the country. And they have ramped up support to the Tehrek-e-Taliban Pakistan (TTP) to promote their version of Sharia law in Pakistan. The Taliban have also failed to prevent the Islamic State group from carrying out attacks in Central Asia and Russia, planned in Afghanistan. It is only a matter of time before there is an attack in Europe or America from this group. If we do not take back Afghanistan, horrors will continue to be visited daily on Afghan women, while the threat of terrorism will grow. Currently, the minds of young men are being polluted by the distortion of Islam taught in Afghan madrassas. The world will be safer without the Taliban in power, and it is time to do something to make that happen.
New Statesman
24 minutes ago
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VJ Day: the forgotten war
General Arthur Percival (bottom, middle), British defender of Singapore in 1942, recently released from a Japanese prison camp, salutes as the US general Douglas MacArthur (bottom, right; facing camera) prepares to sign the document of Japan's surrender aboard the battleship Missouri. Photo by Dave Davis/Getty It's interesting to see how countries choose to remember their wars. It's even more revealing to reflect on the wars they have tried to forget. Earlier this year, Donald Trump delivered a brisk history lesson on social media. 'We did more than any other Country, by far, in producing a victorious result on World War II,' the president declared on his Truth Social platform. 'I am hereby renaming May 8th as Victory Day for World War II and November 11th as Victory Day for World War I. We won both Wars, nobody was close to us in terms of strength, bravery, or military brilliance… We are going to start celebrating our victories again!' Meanwhile, across the Atlantic, the British government was quietly trying to roll up its 80th anniversary events for VE Day (Victory in Europe Day, 8 May) and for VJ Day (Victory over Japan Day, 15 August) into one week in May, with commemorations built around the early May bank holiday. That way, cynics observed, the productivity-conscious Labour cabinet could avoid conceding Britain's workers another day off. The relegation of the Asian half of Britain's Second World War to virtually a postscript was perhaps understandable. The struggle against Japan was not Winston Churchill's finest hour. On the contrary, it signalled the end of the empire to which he had devoted his life. More than that: it heralded the end of all the European empires in Asia over the following decade. It also marked the onset of a cold war in Asia that was very different in shape and intensity from bipolar Europe, creating geopolitical tensions that still wrack our world today. The story defies a simple 'we won, they lost' dichotomy. Britain's Asian debacle was the almost inevitable flipside of its European finest hour. By the 1930s the British empire rested precariously on a mixture of sea power and bluff, and in 1940-41 the bluff was called, first in Europe and then in Asia. In May 1940 Nazi Germany attacked France, Britain's main continental ally, not through Belgium but by sending almost all its armoured divisions through the supposedly impenetrable Ardennes Forest and around the French army's southern flank. They then drove straight for the Channel coast, encircling the bulk of the French and British armies. The French high command lost its nerve and, within a month, France had surrendered. Mussolini's Italy seized its opportunity and jumped into the war on Germany's side – tying down Britain in the Mediterranean. Such is the myth of the irresistible Nazi Blitzkrieg that the sheer audacity of Hitler's Ardennes gamble is now often ignored. Even less appreciated is the strategic magnitude and technical brilliance of the operations mounted by imperial Japan across a vast arc of the Pacific and south-east Asia on 7-8 December 1941. Most notorious is the devastating surprise air raid on the US Pacific Fleet at Pearl Harbor, but this was only one of a series of attacks from Hong Kong to the Philippines, Thailand to Korea, Guam to Malaya – at the same time as Japan was fighting a major war in China. What now seems arrant folly was deemed strategic necessity by the militarists controlling Japan in 1941. In order to continue the struggle for China they needed the strategic raw materials, especially oil and rubber, controlled by the Western colonial powers – the US, Britain and the Dutch. Japan's campaign in Malaya began the endgame of British power across India and south-east Asia. On 7 December an expeditionary force of some 60,000 men led by General Tomoyuki Yamashita landed at Kota Bharu on the north-east coast of Malaya. The British assumed the region was an impenetrable jungle, but it had some good roads, and the Japanese troops – many of them hardy coalminers – had been issued with bikes, shorts, light shirts and plimsolls. They cycled and fought their way south towards Singapore, averaging 20 kilometres a day for 55 days. Not quite the bravura of Hitler's Panzers, but the same mind-blowing mobility. Subscribe to The New Statesman today from only £8.99 per month Subscribe Malaya and Singapore had been starved of troops and aircraft because of Churchill's preoccupation with the Mediterranean. In any case, he did not take the Japanese threat very seriously, dismissing them as 'the wops of the Pacific'. At the end of October 1941 he had sent a token fleet of two battleships and a supporting aircraft carrier to Singapore, hoping this could serve as a 'decisive deterrent'. But the carrier was delayed for essential repairs, and the HMS Prince of Wales and HMS Repulse were sunk on 10 December by Japanese torpedo bombers – a sensational blow to British prestige. Worse followed. The 'great fortress' of Singapore had immense heavy guns, but they faced seawards – Churchill was shocked to discover this late in the day – and British defences against an attack from the Malayan side were minimal. In a telegram from London on 10 February 1942, the prime minister demanded heroics: 'The battle must be fought to the bitter end and at all costs… Commanders and senior officers should die with their troops.' But shelling and air raids were relentless, the streets became piled high with corpses, and the military authorities were out of their depth. One joker in the garrison summed up the mood in mock Churchillian verse: 'Never before have so many/Been fucked around by so few/And neither the few nor the many/Have fuck all idea what to do.' With the Japanese controlling the reservoirs, further resistance seemed suicidal, and General Arthur Percival was given discretion to cease resistance. Yet Yamashita's troops had sustained heavy losses in crossing from Malaya to Singapore, and his artillery men were down to their last hundred rounds. In the words of the historians Christopher Bayly and Tim Harper, 'the Japanese invasion of Singapore island was a gigantic and wholly successful piece of bluff'. The bluff worked superbly: photos and film of Percival and his officers in their baggy shorts being marched off to Japanese prison camps were shown around the world. Among the prisoners of war were troops of the 18th Infantry Division – mostly from East Anglia – who had landed in Singapore only a few days before. More than a third would die in captivity. Churchill declared in his memoirs that the surrender of Singapore on 15 February 1942 was 'the worst disaster and largest capitulation in British history' – adding caustically that 'defeat is one thing; disgrace is another'. [See also: The warning of VE Day] The rest of the Asian war was a huge and bloody effort to reverse Japan's dramatic victories of the winter of 1941-42 – an effort that is often overlooked because of the American preoccupation with the Pacific war, running from Pearl Harbor to Hiroshima and Nagasaki. But the 'Great Asian War' claimed around 24 million lives in countries occupied by Japan, plus three million Japanese and three-and-a-half million in India through war-related famine. Japan's victories shredded polities and societies. The colonial powers' reconquests after 1945 created new turbulence, as did the wars of national liberation that eventually overthrew colonial rule. This three-stage pattern was common across the region, but the timings varied enormously. Speediest was the transition in the vast archipelago of the Dutch East Indies (encompassing much of modern Indonesia), which the Japanese occupied from March 1942 until the end of the war. The Dutch tried to re-establish domination after 1945 but were confronted by an organised national movement under President Sukarno, who won independence for Indonesia in 1949. Similar events in French Indochina were longer, more tortuous and appallingly bloody – stretching out over 30 years. After Japan's wartime occupation of the colony, the French returned in 1945 and were confronted with the communist leader Ho Chi Minh's declaration of independence. After a decade, the French abandoned the struggle and in 1955 Vietnam was partitioned, leaving the communist party in control of the north. That was unacceptable to Cold War America, which increasingly propped up South Vietnam with economic and military aid, and then later, by vast bombing campaigns and US combat troops. But the Vietnam War and the Watergate scandal destroyed Richard Nixon's presidency, and during 1975 US forces were driven ignominiously from all of Indochina. The lurid backdrop of Indonesia and Indochina allows us to see the British withdrawal from south Asia more clearly. Although Britain fought a protracted counterinsurgency before conceding independence to Malaya in 1957 and then similarly to the enlarged Malaysia, it generally managed to avoid the travails of the Dutch and the French. Crucially, the Indian Raj was never invaded and occupied by Japan. Equally significant, Labour's victory in the July 1945 general election replaced the diehard Churchill with Clement Attlee. Whereas Churchill's experience of India ended in 1899, Attlee paid extended visits there in 1928 and 1929 with a parliamentary delegation. He had no doubt that India – a chequerboard of princely states and areas under direct British rule – should eventually follow Australia and New Zealand down the path to self-government and then full independence. He saw this as part of a shift in global power that had been accelerated by the Asian war, telling the cabinet in 1942 that 'the East is now asserting itself against the long dominance of the West'. But trying to surf the tides of history was a perilous business in a polity as vast and volatile as India. Attlee and Labour placed too much faith in the Hindu-led Congress Party, which dominated the interim government formed by Britain in September 1946. Mohammad Ali Jinnah and the All-India Muslim League demanded a greater role, and the escalating communal violence cost thousands of lives. Attlee was also grimly aware of the financial costs of victory, including debts priced at £4.7bn, the sale of £1.1bn worth of overseas assets, and exports down to a third of their 1938 level – no basis for an assertive foreign policy. Over cabinet opposition, he announced a firm date of 30 June 1948 for the end of British rule in India and was then obliged to abandon hopes of a unified country – fabricating instead the states of West and East Pakistan, a thousand miles (1,600km) apart. (The latter broke away in 1971 to form Bangladesh.) The human cost of partition was terrible – scholars estimate one million died and 15 million were displaced. But the Conservatives privately agreed that there was no alternative and even Churchill, despite fulminating about 'socialist scuttle', did not turn India into a political crusade, as he had done in the 1930s. The endgame was briefer and less bloody than Indochina, and the new rulers of India decided to keep their country in the Commonwealth – preserving the fiction of a 'transfer of power'. [See also: How China is reclaiming history] The long denouement of the Great Asian War is only part of the story of Japan's defeat. The central drama of capitulation is beyond the scope of this essay, except to note the continuing debate about the relative importance of the two American atomic bombs, dropped on 6 and 9 August 1945, compared with the shock of the Soviet declaration of war on Japan on the 9th. The answer might seem obvious now, but in Rain of Ruin: Tokyo, Hiroshima and the Surrender of Japan (2025), the historian Richard Overy notes that Japan had never previously been conquered by a foreign power and that the threat of invasion by a communist state seemed particularly horrendous to the Japanese ruling class – opening up fears of a domestic revolution as in Russia or Germany in 1917-18. Regardless of which superpower claimed credit for Japan's defeat, the actual occupation of the country (1945-52) was dominated by the US – unlike the endgame in Germany. Stalin's attempt to grab Hokkaido, one of the four main islands, was blocked by President Harry Truman. American administrators in league with Japanese civil servants pushed through demilitarisation, democratisation, land reform, labour laws and also women's rights beyond anything sanctioned in the US. Galvanised by these radical but peaceful reforms, and sheltering under America's defence umbrella, Japan's economy grew exponentially until the country boasted the highest per capita GDP in the world by the 1980s – not bad as the price of defeat. But the Japanese bubble burst in 1990, and it was followed by two decades of stagnation. Talk of 'Japan as number one' evaporated, and the focus of international attention shifted to China after its Communist Party's brutal suppression of the pro-democracy movement in 1989. This brings us back to the roots of Japan's militarist expansion in the 1930s and 1940s. Its conquest of Chinese Manchuria in 1931-32 escalated into full-scale war with China from 1937 to 1945, costing perhaps 15-20 million lives. The War of Resistance against Japanese Aggression, as it is known in China, was entangled with the longer on-off civil war between nationalists and communists for control of China itself, which resumed in 1946 and led to the eventual triumph of Mao Zedong in 1949 and the nationalists' retreat to the island of Taiwan. For Xi Jinping, appointed leader of the People's Republic of China (PRC) in 2012 and now president for life, these historical issues are of central importance in his sustained challenge to the hegemonial position of the US. He has insisted since 2015 on the need to 'reconsider the great path of the Chinese people's War of Resistance' by taking account of the nationalists' war effort and thereby underlining 'the great contribution that the war [of resistance] made to the victory in the world anti-fascist war', which he also referred to as 'the Second World War'. (This was an attempt to move the Sino-Japanese conflict from the margins to the centre of historiographical discourse.) Speaking in this voice, Xi implied common ground with the nationalists. But that could not override the intolerable fact that their successors still controlled the island of Taiwan – centre of the world's semiconductor production, flanking one of the major global trading arteries, the Taiwan Straits, and a standing affront to the PRC's claim to rule a unified and sovereign state. The possibility that Xi might resolve this dispute by force makes Taiwan one of the world's most sensitive hot spots. Another of Japan's former wartime conquests falls into the same category. Korea has been divided since the war in 1950-53. North Korea is a totalitarian state with nuclear weapons; South Korea is dependent on US military support. Both claim to be the rightful ruler of the whole Korean peninsula, and they are separated only by the armistice line from 1953. Taiwan and Korea are sobering reminders that the legacies of the devastating wars unleashed by imperial Japan are still shaping the 21st-century world. VJ Day should not be treated as a mere postscript to VE Day. As for the Trumpian issue of which country won the Second World War, it should be clear by now that a world war is a lot more complex than winning the World Series. David Reynolds' most recent book is 'Mirrors of Greatness: Churchill and the Leaders Who Shaped Him'. He co-hosts the 'Creating History' podcasts. [See also: North Korea's guide to going nuclear] Related
New Statesman
24 minutes ago
- New Statesman
Rachel Reeves was right about non-doms
Photo byLast spring, Britain's newspapers and money-watchers promised a mass exodus of wealth. Labour's plan to scrap the 'non-dom' tax status, Henley & Partners warned, would drive high-net-worth individuals from Britain in droves. Henley, who make money selling passports to the globally mobile rich, said the scale would be historic, a fiscal catastrophe in the making. Within days, the spectre of a millionaire migration was front-page fact. Rachel Reeves's first fiscal move as chancellor would unravel before it began. HMRC's new payroll data has proven otherwise. The number of top earners on PAYE, the best real-time proxy for high-income residents, has not collapsed. In fact, receipts from that group are holding up. There is no sign of the disproportionate departures Henley forecast, or the domino effect of rich following rich out of the UK. Crisis averted. It is a small but pointed vindication for Reeves. The non-dom reform is still forecast to raise billions over the next five years. For once, the 'wealth will flee' mantra collided with hard numbers and lost. Henley has now softened its claims, dropping 'exodus' from its vocabulary. Yet the moment passed months ago; the initial campaign did its work, and it is much easier to plant a headline than to uproot it. That asymmetry between how fast a narrative moves and how slowly facts arrive should worry Reeves more than any yacht in Monaco. The Treasury got lucky. On income, HMRC can produce monthly PAYE data, which means she had facts to fight fiction. On wealth, no such armour exists: we govern wealth in a data desert. The UK does not have a live, comprehensive picture of who owns what. The Land Registry records transactions, but overseas owners can be hidden behind shell companies or trusts, and beneficial ownership filings are riddled with gaps. Companies House has only just begun to verify directors' identities. Offshore holdings sit beyond the line of sight. Even the Office for National Statistics must rely on household surveys that the very wealthy rarely complete – meaning the top tail of the Sunday Times Rich List is easier to read than any official distributional table. If income taxation is conducted with spreadsheets, wealth taxation is based on back-of-envelope estimates. This matters because income is not the only, or even the primary, source of economic power. A salaried professional in London pays income tax and National Insurance on almost all of their earnings. A landlord, by contrast, pays capital gains tax at lower rates when they sell a property, and can hold appreciated assets untaxed for decades. The gap endures because the political will to close it is as absent as the data needed to do so. HMRC knows every inch of your payslip, but they know very little about a millionaire's investment portfolio. It should be obvious that the ultra-rich are not maintaining their lifestyle through their 9-5 wage. Without better data, these imbalances are easier to ignore, and harder to challenge. The gains in wealth are real – property wealth has risen by £1.6 trillion in a decade, and the top 1 per cent hold a third of UK net wealth – but we lack the infrastructure to say, with authority, where that wealth sits and in what form. In the absence of clarity, those statistics can be disputed, delayed, or dismissed. That leaves any move to tax wealth on a more equal footing with work exposed to the same lobbying tactics that failed over non-doms, but without PAYE receipts to fight back. Subscribe to The New Statesman today from only £8.99 per month Subscribe The political opportunity here is unignorable. The non-dom episode showed that a robust policy, grounded in plausible revenue estimates and implemented without theatrics, can survive scare stories. Extending that logic to wealth would mean two things: first, investing in the infrastructure to know what we are taxing; and second, closing the gap between how we treat earnings from work and earnings from assets. This is an argument for an investment in information. Without it, ministers are left defending abstractions against fiction. With it, they can decide whether taxing capital gains like income is worth the political capital, or whether tightening inheritance tax loopholes is worth risking a few seats in the South East. The lesson Reeves will take from the HMRC release is that the rich did not run. But it should also be that knowing what the rich are doing with their wealth is politically useful. Imagine having that same clarity over who owns £10m townhouses through shell companies, or who holds vast portfolios via offshore trusts. Labour's second full budget in office will set the tone for the rest of its term. Governing by myth – about investment strikes, welfare fraud, or rich flight, invites those myths to govern you in return. Governing by data wonkery, on the other hand, does not guarantee a better day for Labour's press office, but it at least allows policy to survive its first contact with reality. As the Treasury gears up for an Autumn of tax rises, this is a political lifeline worth investing in. Reeves should treat the non-dom figures as a prompt to build the institutional arsenal she will need for bigger battles ahead. [See also: Let the non-doms leave] Related
