Economy expanded by 0.5% in the last quarter

The UK economy expanded by 0.5% in the second quarter, an upgrade from the initial 0.4% estimate and following 0.6% growth in Q1, official figures from the Office for National Statistics show. Annual growth was also revised higher to 1.4%, although the estimate for full-year 2025 growth was reduced to 1.2%.

Consumers continued spending during the first half, while the household saving ratio increased by 0.2 percentage points to 8.8%. Sterling strengthened following the GDP figures,

The upward revision was led by a strong performance in the services sector, which expanded by 0.6 per cent in the period. The ONS also found that consumers put away more into savings over the period. The savings ratio, the proportion of disposable income saved rather than spent, increased 0.2 percentage points to 8.8 per cent (Bloomberg).

It means that the UK was the fastest-growing G7 economy in the first half of the year, with consumers continuing to spend over summer, despite inflationary pressures caused by the conflict in the Middle East. However, Martin Beck, Chief Economist at WPI Strategy, said: “High petrol prices, rising household energy bills and uncertainty ahead of the Budget are likely to take some momentum out of growth over the coming months.”

Mike Randall, CEO of Simply Asset Finance, said  “At a time when the geopolitical temperature is rising, today’s slight rise in GDP offers a welcome sign of resilience, with the economy edging forward despite a challenging backdrop. However, it is hard to view these figures as a reason for complacency. Growth remains modest, and the daily reality for business owners is still one of higher operating and financing costs, as well as subdued business investment.

“The time for warm words is over. Businesses are looking to the Government to make good its commitments to support small businesses. From access to finance to managing fuel costs, real growth for UK PLC depends on taking action to strengthen business confidence and creating an environment where SMEs want to invest and hire.”