UK GDP grows 0.3% in Q2, beating G7 peers

The UK economy grew significantly from April to June, expanding its gross domestic product (GDP) by just 0.3%. Analysts from Reuters and the Bank of England (BOE) had forecasted a 0.1% growth in the second quarter of 2025.

The country’s economy also seems to be performing better than the G7 on a half-year basis. It surpassed the group with an annualized rate of 2.2% for both Q1 and Q2.

The UK’s 0.3% growth in Q2 matched France’s, while Canada’s remained flat, and Germany and Italy contracted by 0.1% each. The U.S. outpaced the UK with 0.7% GDP in Q2.

UK performs better in Q2 than Q1

Decent UK GDP growth in June – and revisions higher to April – meaning UK GDP of +0.3% in Q2. UK currently the fastest growing G7 economy in H1 at an annualised rate of 2.2%. pic.twitter.com/3UsD5eEtAu

— Simon French (@Frencheconomics) August 14, 2025

According to the Office for National Statistics (ONS), Britain’s Q2 report was better than its first three months of the year, where it faced the effects of Trump’s heightened tariffs on imports. Its GDP rose 0.7% as businesses rushed to prepare for U.S. trade policies. The UK’s Q2 growth also grew by 1.2% compared with the same quarter a year ago.

As reported earlier by Cryptopolitan, the country’s economic activity in April and May weakened as businesses imported goods early in the year to avoid the stamp duty change and levy changes. Growth rebounded in June from services, the largest sector of the economy, with computer programming, health, and vehicle leasing performing well, according to ONS’s director of economic statistics, Liz McKeown.

She also revealed that scientific research and development, production of electronics, as well as engineering and car sales, all contributed to strong growth in June. Government spending had the most impact on growth, driven by spending on health, especially vaccinations, and public administration and defence.

According to ONS, construction also performed well in Q2, climbing 1.2% due to UK private housing activity. Manufacturing also saw a 0.3% surge, while machinery and equipment grew by 3.0%.

Rachel Reeves, Chancellor of the Exchequer, argued that the country had positive growth with a strong start to the year and continued growth in the second quarter. She also believes there’s more for the economy to deliver to Britain’s citizens.

“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.”

-Rachel Reeves, Chancellor of the Exchequer.

UK’s exports surged by 1.6% YoY largely due to stronger services exports. Imports also rose by 1.4% driven by a rise in goods imports in the midst of the global trade war, as previously reported by Cryptopolitan.

Britain’s nominal GDP rose by 0.8% from April to June, rising 5.3% higher compared with the same quarter a year ago. According to ONS, the implied price of GDP slowed in the same period, with an increase of only 0.4%, the slowest quarterly growth since Q4 2023.

James Smith, an economist at ING, said he expects growth to slow in the second half of the year as the economy faces uncertainty around Trump’s trade war and a sluggish domestic outlook. Reeves has mentioned her self-imposed fiscal rules that are meant to tackle government spending.

Tax hikes threaten the UK this coming fall

⚡️OUT NOW⚡️ The #Chancellor's impossible 'trilemma' (fiscal rules, tax&spend commitments, manifesto promises)💥

Our latest UK Economic Outlook suggests the Chancellor will need to find over £40bn in the Autumn #Budget to fill the gap📈

Read more here👇https://t.co/TM1CuiT9fT

— National Institute of Economic and Social Research (@NIESRorg) August 6, 2025

The Chancellor’s rules target a balanced or budget surplus by the end of the decade. She also suggested the stability rule for day-to-day spending to be funded by tax revenues rather than borrowing. In her investment rule, debt should be dropping by the end of the current parliament, around 2029-30.

Last week, the National Institute of Economic and Social Research warned that Reeves’s rules will lead to a rise in taxes later this year. It forecasts a current deficit of 41.2 billion euros in the fiscal year 2029-30. NIESR argued the fall budget would need adjustments if Reeves is to push through with her fiscal rules.

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