UK economic growth slows but beats forecasts

UK economic growth slowed between April and June, according to official figures, but was better than expected.

The economy expanded by 0.3%, down from 0.7% in the first three months of the year, the Office for National Statistics said.

The biggest contribution came from services while the construction industry also grew.

The UK government has made boosting economic growth a key priority and the latest data beat forecasts of 0.1% expansion, which would have been near stagnation.

Chancellor Rachel Reeves said the figures were “positive” for an economy that “has felt stuck for too long”.

But she added: “There is more to do to deliver an economy that works for working people.”

However, Conservative shadow chancellor Mel Stride accused her of “economic vandalism” while Liberal Democrat treasury spokeswoman Daisy Cooper MP said: “Snails would scoff at the pace that our economy is growing.

“The Conservative Party led us into this economic quagmire but this Labour government has failed to break from the years of mismanagement.”

The economy performed better than expected in June, according to ONS figures, while previous estimates for April were revised upwards.

The ONS had initially said that gross domestic product (GDP) – a key measure of economic activity – had shrunk by 0.3% in April but now said it contracted by 0.1%.

But Ruth Gregory, deputy chief UK economist at Capital Economics, said it was doubtful the country “will maintain this pace of growth” between July and September.

“The weak global economy will remain a drag on UK GDP growth for a while yet,” she said.

“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 Autumn Budget will probably keep consumers in a cautious mood.”

James Smith, an economist at ING Bank, told the BBC’s Today programme that the figure for the April-to-June period was “not bad”.

In the first three months of the year, economic growth was “boosted by firms trying to get ahead of Donald Trump’s tariffs”, he said, as well as homebuyers rushing to complete before a change in stamp duty thresholds in April.

“Those factors were always going to be a drag, so the fact that we’ve ended up with 0.3% growth in an environment of global uncertainty isn’t really a bad result,” he said.

Experts suggested that hot, dry weather helped boost the construction sector which expanded by 1.2% between April and June.

Iain Hoskins, who owns several venues in Liverpool, said he was “very worried” after the last Budget, with increase National Insurance Contributions adding £100,000 to his costs.

However, he said he was “feeling more positive than we have done for the last few years,” thanks largely to better weather and consumer confidence.

“The quarter that we are talking about, we had a very early summer and often that period can be a complete washout,” he said. “Unexpected sunshine really did bring people out in force.

“Interest rates going down has really helped: more money in peoples’ pockets. That is fundamental.”

The Bank of England has cut interest rates five times over the past 12 months, taking borrowing to 4%.