Economic growth slowed in the second quarter, as the effects of the Middle East conflict began to take its toll.
The latest figures from the Office for National Statistics showed the economy grew by 0.4% between April and June, in line with economists’ expectations but below the 0.6% growth seen in the three months to May.
However, despite the softer figures, analysts said the data highlighted resilience within the economy.
Richard Carter, head of fixed interest research at Quilter Cheviot, said: “The UK economy showed a fair amount of resilience in the second quarter of the year. This backs up a first quarter figure of 0.6%, certainly a long way from a lot of the gloom that came in the immediate aftermath of the conflict in Iran.
“While the growth is nothing to write home about, it is perhaps reflective of the fact that the economy was in a more robust shape than thought given what the first six months have thrown up so far.”
Sam North, market analyst at etoro, said: “Britain’s 0.4% second-quarter growth rate may only have matched forecasts, but the detail is considerably better than the headline suggests. The economy finished the quarter with a surprisingly strong 0.3% rise in June, while growth was relatively broad-based.
“This is not a boom though, and quarterly growth has slowed from 0.6%, but Britain is proving significantly harder to knock off course than many feared.”
Services output was the main positive driver, growing by 0.5% between April and June, following growth of 0.6% in the three months to May. Construction output grew by 0.3%, while production output showed no growth during the period.
However, experts warned that the UK faces challenges in maintaining momentum during the second half of the year.
Stuart Morrison, research manager at the British Chambers of Commerce, said: “The headline figures shouldn’t disguise the cocktail of cost pressures choking long-term business growth.
“This is not a new problem. Our analysis shows domestic policy-driven costs for a typical SME have risen by more than 70% over the past decade.
“The Autumn Budget must be a game changer for stronger, sustainable growth. We need measures that boost trade, investment and productivity. In short, the Chancellor must back business, cut costs and deliver growth.”
Carter added: “The UK has been in this position before, with the first half of 2025 delivering a strong level of growth, only for GDP to grind to a halt in the second half. It is likely a similar trend may emerge again, even with a new prime minister keen to boost consumer confidence.
“As we get closer to October’s Budget, it is vital that the new administration does not repeat the same mistakes as the last one and choke off any growth by allowing speculation of tax rises to run rampant. Clear messaging and a more coherent narrative from Andy Burnham and John Healey should ultimately be beneficial for growth.
“Nevertheless, the Government needs to find ways to unlock more growth opportunities for the economy. Burnham likes to talk about delivering ‘good growth’, which is ultimately a very admirable aim, but for an economy that has languished in recent years it first needs to find consistent momentum, not one or two good quarters a year. With the Bank of England very unlikely to cut rates soon, fiscal policy will have to do a lot of the heavy lifting.”
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