UK economic growth slows between April and June

Yahoo

3 days ago

The UK economy's growth slowed between April and June, according to official figures, as US president Donald Trump's tariffs hit and businesses grappled with higher costs.
Figures from the Office for National Statistics (ONS) showed growth in gross domestic product (GDP) slowed to 0.3% in the three months to the end of June, down from a rate of 0.7% in the first quarter.
Economists polled by Reuters, as well as the Bank of England, had forecast 0.1% growth in GDP for the April-June period.
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%
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.
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'Across the second quarter as a whole growth was led by services, with computer programming, health and vehicle leasing growing. Construction also increased while production fell back slightly. Growth for the quarter was also boosted by updated source data for April, which while still showing a contraction, was better than initially estimated.
'Services also drove growth in June with scientific R&D, engineering and car sales all having a strong month. Within production, which recovered, manufacture of electronics performed especially well.'
Chancellor Rachel Reeves is gearing up for an autumn budget that economists have warned will require tax increases to fill a fiscal hole that exceeds £20bn.
Reeves warned there is 'more to do' to boost the economy after growth more than halved in the second quarter of the year.
The chancellor 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."
Monthly figures showed the economy returned to growth in June, expanding by 0.4%, surpassing predictions for 0.1% growth in a recovery from two months of negative output in April and May.
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Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: "For consumers, weaker growth in the second quarter is worrying. If earnings stagnate and redundancies ramp up — as suggested by the latest jobs data this week with unemployment remaining at a four-year high of 4.7%, vacancy levels falling and wage growth easing — many households could face renewed financial strain.
'A softening labour market, stubbornly high inflation, slowing wage increases and a higher tax burden present a troublesome combination for household budgets.
"While five interest rate cuts since August last year have offered some relief, the latest 25 basis-point reduction to 4% may not be reflected in lower borrowing costs across the board as some lenders remain cautious about future rate cut expectations amid niggling inflationary pressures. With food prices continuing to surge, the Bank of England has signalled that interest rates may need to remain elevated for longer as it expects consumer price inflation to peak of 4% in September.
"This will deliver a blow to households, with many still grappling with the lingering effects of the cost of living crisis."