Britain’s economy expanded by 0.3% in the second quarter of 2025, beating expectations and providing a welcome boost to Finance Minister Rachel Reeves, according to official data released on Thursday.
The figures from the Office for National Statistics (ONS) showed the April–June growth rate was triple the 0.1% predicted by both economists polled by Reuters and the Bank of England. The performance follows a robust 0.7% rise in the first quarter, which Reeves has already touted as the strongest among the Group of Seven (G7) advanced economies.
In June alone, GDP rose 0.4%, reversing a 0.1% dip in May. The monthly rebound was driven by stronger-than-expected gains across the services sector, industrial production, and construction activity.
Year-on-year, the economy was 1.2% larger than in the same quarter of 2024, surpassing the median forecast for 1.0% growth. The upbeat figures prompted a modest strengthening of the pound against the U.S. dollar in early trading.
“This shows our economy’s underlying resilience,” Reeves said in a statement, adding that the government’s focus on investment and productivity was starting to yield results.
Despite the strong first half of the year, economists warn that growth prospects for the remainder of 2025 are less encouraging. The UK faces persistent global trade uncertainty, heightened by increased U.S. import tariffs, and a slowdown in domestic hiring. Analysts say the latter is partly due to higher employment taxes and a sharp rise in the minimum wage, which has increased labour costs for many employers.
Last month, the International Monetary Fund (IMF) forecast that Britain’s economy would grow by 1.2% in 2025 and 1.4% in 2026. While this pace would outstrip the euro zone and Japan, it is expected to lag behind the United States and Canada.
The latest ONS breakdown highlighted that services — which account for the largest share of UK output — saw particularly strong gains in business services, finance, and hospitality. Industrial production was boosted by manufacturing growth, while construction benefited from increased infrastructure and housing projects.
However, analysts caution that higher borrowing costs, global economic uncertainty, and potential trade frictions could weigh on momentum in the months ahead. “The data is encouraging, but the economy is not out of the woods yet,” said one London-based economist, noting that consumer spending remains sensitive to inflationary pressures and interest rate policy.
For now, the stronger-than-expected figures provide the government with a political lift. Reeves, who has been under pressure to demonstrate progress on economic growth, is likely to point to the UK’s performance as evidence that the country is weathering global headwinds better than many had anticipated.
