UK economy slows less than feared after tariffs
Gross domestic product grew 0.3 per cent in the April-June period, the Office for National Statistics (ONS) said in a statement — beating analyst forecasts of 0.1-per cent growth after reaching 0.7 percent in the first quarter.
"Today's economic figures are positive with a strong start to the year and continued growth in the second quarter," said finance minister Rachel Reeves.
"But there is more to do to deliver an economy that works for working people," she added in a statement, following a difficult first year in power for the Labour government as the economy struggles to grow significantly.
ONS data on Thursday showed that growth to UK construction and services in the second quarter helped to offset a drop in production.
"Growth was led by services, with computer programming, health and vehicle leasing growing," noted Liz McKeown, ONS director of economic statistics.
Overall GDP grew 0.4 per cent in June after contracting slightly in April and May, the statistics office added.
June's figure "will be welcome news for the government, which has had a frustrating time chasing elusive growth", noted Susannah Streeter, head of money and markets at Hargreaves Lansdown.
Official data Wednesday showed UK unemployment at a four-year high of 4.7 per cent in the second quarter.
This is largely a result of Prime Minister Keir Starmer's government increasing a UK business tax from April, the same month that the country became subject to US President Donald Trump's 10-per cent baseline tariff on most goods.
However, London and Washington reached an agreement in May to cut levies of more than 10 per cent on certain UK-made items imported by the United States, notably vehicles.
"A favourable trade agreement has enabled output to pick up again as June showed growth in all sectors including manufacturing," said Danni Hewson, head of financial analysis at AJ Bell.
Despite the turnaround in June, exports of goods to the United States fell by £700 million ($950 million) in the month to their lowest level since February 2022, the ONS added Thursday.
"The value of goods exports to the United States... have remained relatively low since the introduction of tariffs in April," it noted.
Citing threats to growth from US tariffs, the Bank of England last week cut its key interest rate by a quarter point to four percent.
"The weak global economy will remain a drag on UK GDP growth for a while yet," Ruth Gregory, deputy chief UK economist at Capital Economics research group, said following Thursday's data.
"The full drag on business investment from April's tax rises has yet to be felt. And the ongoing speculation about further tax rises in the (UK) autumn budget will probably keep consumers in a cautious mood."
Streeter added that "evidence of a more resilient economy may mean that the Bank of England policymakers are that bit more reticent about cutting interest rates in the months to come". — AFP
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Observer
a day ago
- Observer
UK goods exports to US fell to 3-year low in June
LONDON: British goods exports to the United States fell to their lowest level in more than three years in June, according to official data published on Thursday that showed the hit from US President Donald Trump's initial import tariff blitz. Sales of British goods to the United States fell to 3.9 billion pounds ($5.3 billion) during the month, down by 0.7 billion pounds from May and about 20% lower than a monthly average of 4.9 billion pounds in 2024. The last time Britain exported fewer goods to the United States - including sales of precious metals which can be volatile - was in February 2022, the Office for National Statistics said. British Prime Minister Keir Starmer and Trump agreed a trade deal which came into force on June 30 to cut high tariffs on cars and aerospace parts but leaves a 10% tariff on most exports with steel not yet covered. The ONS reported decreases in exports of all commodities to the United States in June with machinery and transport equipment - including cars which were hit by higher initial US duties - down by 0.2 billion pounds. The ONS last week said a third of exporting businesses with 10 or more employees reported an impact from the US tariffs. British imports of US goods increased by 0.2 billion pounds in June, driven by higher aircraft sales, Thursday's data showed. In the April-to-June period, British exports to the United States fell by more than a quarter, reflecting how many manufacturers rushed to send their products across the Atlantic before Trump's first tariffs blitz in April. — Reuters
Observer
a day ago
- Observer
UK economy slows less than feared after tariffs
LONDON: Britain's economy performed better than expected in the second quarter as it weathered the impact of US tariffs and a higher UK business tax, official data showed on Thursday. Gross domestic product grew 0.3 per cent in the April-June period, the Office for National Statistics (ONS) said in a statement — beating analyst forecasts of 0.1-per cent growth after reaching 0.7 percent in the first quarter. "Today's economic figures are positive with a strong start to the year and continued growth in the second quarter," said finance minister Rachel Reeves. "But there is more to do to deliver an economy that works for working people," she added in a statement, following a difficult first year in power for the Labour government as the economy struggles to grow significantly. ONS data on Thursday showed that growth to UK construction and services in the second quarter helped to offset a drop in production. "Growth was led by services, with computer programming, health and vehicle leasing growing," noted Liz McKeown, ONS director of economic statistics. Overall GDP grew 0.4 per cent in June after contracting slightly in April and May, the statistics office added. June's figure "will be welcome news for the government, which has had a frustrating time chasing elusive growth", noted Susannah Streeter, head of money and markets at Hargreaves Lansdown. Official data Wednesday showed UK unemployment at a four-year high of 4.7 per cent in the second quarter. This is largely a result of Prime Minister Keir Starmer's government increasing a UK business tax from April, the same month that the country became subject to US President Donald Trump's 10-per cent baseline tariff on most goods. However, London and Washington reached an agreement in May to cut levies of more than 10 per cent on certain UK-made items imported by the United States, notably vehicles. "A favourable trade agreement has enabled output to pick up again as June showed growth in all sectors including manufacturing," said Danni Hewson, head of financial analysis at AJ Bell. Despite the turnaround in June, exports of goods to the United States fell by £700 million ($950 million) in the month to their lowest level since February 2022, the ONS added Thursday. "The value of goods exports to the United States... have remained relatively low since the introduction of tariffs in April," it noted. Citing threats to growth from US tariffs, the Bank of England last week cut its key interest rate by a quarter point to four percent. "The weak global economy will remain a drag on UK GDP growth for a while yet," Ruth Gregory, deputy chief UK economist at Capital Economics research group, said following Thursday's data. "The full drag on business investment from April's tax rises has yet to be felt. And the ongoing speculation about further tax rises in the (UK) autumn budget will probably keep consumers in a cautious mood." Streeter added that "evidence of a more resilient economy may mean that the Bank of England policymakers are that bit more reticent about cutting interest rates in the months to come". — AFP
Muscat Daily
2 days ago
- Muscat Daily
MoL reintegrates over 10,000 Omanis into workforce in 5 years
By OUR CORRESPONDENT Muscat – Ministry of Labour (MoL) has successfully reintegrated more than 10,000 Omanis in over five years who were previously laid off, marking a key achievement in the government's efforts to strengthen the national job market. Ammar Salim al Saadi, Director General of Labour, told Oman TV, 'We have been able to facilitate the return of more than 10,000 citizens to the job market, achieving a significant milestone in the ministry's continuous efforts to reduce unemployment and support economic stability.' Saadi said MoL implemented measures to ensure citizens whose services were terminated did not face additional financial burden. 'Since the launch of the job security system in 2020 till June 2025, 10,387 citizens have been re-employed across government and private sectors,' he added. He informed that in the period between 2020 and mid-2025, the ministry offered over 170,000 job opportunities. While 27,227 people were laid off in this period, 41% were successfully reintegrated. MoL has also launched an electronic system – Al Mu'ama – to assist laid-off individuals in registering and finding suitable job opportunities. Currently, the system lists around 1,500 openings in government and private entities. Last week, the Youth and Human Resources Committee of Majlis A'Shura called for immediate resumption of the job security benefit previously extended to laid-off workers, citing significant social and economic repercussions of its suspension. The committee examined the impact of freezing the benefit disbursed by Social Protection Fund. Members raised concern about the worsening living conditions of those affected and emphasised the need to resume the aid to ensure psychological and social stability for impacted individuals and their families. The committee urged relevant authorities to take immediate steps, including empowering governorates and promoting decentralised decision-making in employment and redundancy matters. Members noted that such an approach would facilitate faster, locally-tailored solutions aligned with the specific needs of each governorate. There was strong emphasis on the need to create job opportunities based on qualifications and professional experience of laid-off workers, alongside implementation of requalification and skills development programmes to support their reintegration into the labour market. The committee also called for building a comprehensive and regularly updated database of jobseekers and laid-off individuals to better inform national employment policies and future strategies.
