UK economic system grew by 0.4% in June on stronger providers and development output – enterprise stay | Enterprise

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Eurozone GDP’s second studying got here in as anticipated at 0.1% quarter-on-quarter for the second quarter – weak, however not a shock. Nonetheless, there have been some worrying indicators from industrial manufacturing information.

Industrial manufacturing fell by 1.3% within the eurozone within the 12 months to June, in accordance with figures printed by Eurostat. That was an acceleration within the fee of decline from Might, and worse than the 1% drop anticipated by economists polled by Reuters.

Corporations raced to supply items and ship them to the US within the first quarter of 2025 – offering a short-lived enhance to financial output – however that appears to have unwound through the second quarter, because the tariffs had been truly carried out. European manufacturing unit output has since fallen again.

Carmakers specifically had been badly hit, with a 15% fee agreed final month, after an preliminary fee of 27.5% on automotive exports to the US.

Eurozone industrial manufacturing dropped in June, after a surge within the first three months of 2025 as corporations tried to get forward of Donald Trump’s tariffs. {Photograph}: Eurostat Share Up to date at 05.19 EDT

Nonetheless, Matt Swannell, chief financial advisor to the EY ITEM Membership, a forecaster, stated that “the underlying image for the UK is one in all continued sluggish development”.

He stated:

This largely displays the power of home headwinds, together with a big tightening in fiscal coverage and the lagged affect of previous rate of interest rises. US tariff bulletins can even drag on the near-term development outlook.

Share The second-quarter UK GDP figures depend as a “main beat”, in accordance with Andrew Wishart, senior UK economist at Berenberg, an funding financial institution. That's economist-speak for information that can immediate a rethink of the narrative across the economic system – and he added there could also be excellent news on productiveness as nicely.

Wishart wrote in a observe to shoppers:

It now appears to be like just like the UK economic system weathered US tariffs and home tax hikes remarkably nicely within the second quarter.

With the economic system benefitting from fiscal help and displaying little signal of rates of interest slowing it down, the sturdy information help our view that the Financial institution of England will wait till subsequent 12 months earlier than slicing financial institution fee once more.

The commerce information didn't present a marked hunch again within the second quarter, even after a rush within the first quarter to get forward of Donald Trump’s tariffs.

And there was even some optimistic information from the lodge and restaurant sectors, the place output rose by 2.4% quarter-on-quarter regardless of bloodcurdling warnings on the affect from will increase on nationwide insurance coverage and the minimal wage. That made development within the lodge and restaurant sector optimistic for the primary time in a number of years, Wishart stated. He added:

Bettering development concurrently the sector cuts employees numbers implies that operators have been in a position to make vital enhancements in productiveness. Whereas the lodge and restaurant sector is an excessive instance, an economy-wide decline in employment alongside cheap GDP development means that productiveness development is enhancing. On the margin, that can give the federal government’s official forecaster, the Workplace of Funds Accountability, some confidence that it's proper to imagine a restoration in productiveness development after a dismal three years. In that case, the federal government won't want to boost taxes by anyplace close to as a lot this autumn as essentially the most pessimistic analysts declare within the press.

Share Let’s get some extra economists’ ideas on the UK’s GDP numbers – surprisingly sturdy in June.

One of many key upshots of the information could also be to permit the Financial institution of England to attend longer earlier than deciding whether or not to chop rates of interest once more, in accordance with Bruna Skarica, an economist at funding financial institution Morgan Stanley. She wrote in a observe to shoppers:

The optics of a “resilient” economic system enable for BoE endurance as headline inflation bobs round between 3.5% and 4% within the coming months. That stated, we predict softer underlying particulars and the seemingly softening of the expansion momentum from right here hold a November reduce in play.

Rates of interest are too excessive for a sustained and broad-based development uptick. If the federal government ensures that the autumn finances doesn't repeat the 2024 slew of inflation-boosting insurance policies, and measured inflation falls by way of 2026, we predict the [Bank’s rate-setting monetary policy committee] will acknowledge the necessity to reduce charges amid the continued build-up of slack. If that isn't the case, we are going to see extra of the identical stagflationary dynamics, we predict.

Share Rachel Reeves’s message is that there's “extra to do” on the UK economic system forward of the finances within the autumn – though the chancellor has centered on enhancing productiveness somewhat than addressing questions on whether or not taxes will enhance.

The Guardian’s senior economics correspondent, Richard Partington, explains:

Setting out her priorities for the finances for the primary time, the chancellor stated tackling the effectivity of the economic system by way of greater funding and a recent assault on planning guidelines would type the spine of her tax and spending plans.

Nonetheless, Reeves pushed again in opposition to what she referred to as “hypothesis” over tax will increase being explored by the Treasury to shut a yawning hole within the public funds that's estimated to succeed in greater than £40bn.

Reeves wrote:

As a result of Britain’s productiveness drawback is just not an summary, technocratic one – it straight impacts each working household in Britain who really feel they're squeezing each penny to make ends meet. When companies can’t develop, wages stagnate and there's much less cash within the pockets of working individuals. When infrastructure is insufficient, prices rise, and alternatives are misplaced.

When abilities don't match financial wants, potential goes unfulfilled. With decrease productiveness, tax revenues go down and our public providers face cuts. And with the world altering, Britain has been left too uncovered to international shocks.

You'll be able to learn it in her personal phrases right here:

Share Rachel Reeves says tax choices should wait till finances amid inheritance tax questions UK chancellor Rachel Reeves has stated that tax choices must watch for the autumn finances after she was requested in regards to the Guardian’s report that officers are contemplating inheritance tax adjustments as a manner of elevating cash.

The Guardian’s Metropolis editor, Anna Isaac, reported: “A lifetime cap could possibly be launched to restrict the sum of money or worth of belongings a person can donate as a part of their IHT planning and the Treasury can be reviewing guidelines across the taper fee, individuals accustomed to the matter stated.”

Requested about the potential of inheritance tax will increase on Thursday, Reeves didn't rule it out. PA Media reported that she stated:

Any determination round taxation is a ... determination for the finances, and I’ll make these bulletins.

We haven’t even set the date but for the finances, however the important thing focus of the finances goes to be to construct on numbers that we’ve seen at this time to spice up productiveness and development and prosperity all throughout the nation.

“That's my primary precedence as chancellor, to get our economic system firing off all cylinders in order that working individuals in all elements of the nation will really feel the advantages of that financial development.

Pushed on whether or not taxes must enhance within the autumn, Ms Reeves added:

We’ll watch for the official forecast from the Workplace of Funds Accountability, and we’ll make these choices within the spherical.

Share Up to date at 04.11 EDT

Aviva share value rises after sturdy first-half working earnings Aviva’s share value has jumped after it reported sturdy earnings for the primary half of 2025 and stated its integration of Direct Line was going nicely.

The FTSE 100 insurance coverage group’s working revenue rose 22% year-on-year to £1.1bn through the first half of 2025, it reported on Thursday.

Amanda Blanc, Aviva’s chief govt, stated:

Aviva’s efficiency within the first half of 2025 was excellent, rising working revenue by 22% and lengthening our observe file of supply. One other set of high-quality outcomes, mixed with glorious strategic progress, are additional proof of how we're pushing Aviva ahead. This glorious efficiency permits us to attain much more for our prospects and our shareholders, and at this time we're rising the interim dividend to 13.1 pence per share.

Blanc added that “integration is nicely underway” for Direct Line, which it agreed to purchase in December for £3.7bn.

Aviva’s share value rose by 3.6% on Thursday, hitting a brand new excessive level since manner again in December 2007, when the worldwide monetary disaster was beginning to shake markets (and Aviva was nonetheless named Norwich Union, a 200-year-old title given by the founding wine service provider and banker, after he couldn't discover anybody prepared to insure him in opposition to the risk posed by highwaymen).

Aviva's share value rose to a brand new 17-year excessive after it revealed sturdy monetary outcomes. {Photograph}: Refinitiv Share Nationwide Grid sells Grain gasoline import terminal for £1.7bn to Centrica and Bridgepoint An worker appears to be like in the direction of the Gallina liquefied pure gasoline (LNG) tanker after docking on the Nationwide Grid's Grain LNG plant on the Isle of Grain in Rochester in 2017. {Photograph}: Bloomberg/Getty Photographs Nationwide Grid has agreed a £1.7bn deal to promote its Grain LNG enterprise to British Fuel proprietor Centrica and US non-public fairness group Bridgepoint.

Grain LNG owns and operates the UK’s largest LNG import terminal, on the Isle of Grain in Essex, underneath long-term take or pay contracts. Nationwide Grid has been searching for the final 12 months to eliminate companies that aren't its predominant deal with electrical energy networks.

Grain has been one of many key elements of the UK’s vitality system ever for the reason that UK opted to extend its consumption of gasoline for energy technology. It beforehand took in massive portions of gasoline from Russia earlier than the full-scale invasion of Ukraine, though that focus has shifted to the Qatar, Australia and significantly to the US because of its shale gasoline increase making it a serious vitality exporter.

John Pettigrew, chief govt of Nationwide Grid, stated:

At the moment’s announcement of the sale of Grain LNG marks one other profitable step in delivering Nationwide Grid’s beforehand communicated technique to streamline our enterprise and deal with networks, and follows the completion of the sale of our NG Renewables enterprise in Might 2025.

Centrica’s share value rose 1.3% on Thursday. It stated it had injected £200m in fairness, with the majority of the acquisition funded by debt.

Chris O’Shea, group chief govt of Centrica, stated:

The Isle of Grain terminal is a strategic asset that can help the UK’s vitality safety for a lot of a long time to return, holding vitality flowing reliably and affordably to households and companies throughout the nation as we transition to internet zero. That’s why we're so happy to be investing, persevering with Centrica’s pivot in the direction of long-term, predictable infrastructure money flows, underpinning our medium-term steerage and creating helpful future choices.

O’Shea additionally threw the UK authorities a bone, saying: “Our determination to commit £3bn of capital in each Sizewell C and the Isle of Grain demonstrates the attractiveness of the UK as an funding location underpinned by supportive authorities funding insurance policies.”

Share Stronger-than-expected GDP figures haven't helped the FTSE 100 very a lot this morning: London’s predominant inventory market index dropped 0.3% within the first couple of minutes of buying and selling on Thursday.

That's bucking the development throughout most of Europe’s large corporations. Listed below are the opening snaps for European indices, through Reuters:

EUROPE’S STOXX 600 UP 0.09%

GERMANY’S DAX UP 0.08%

FRANCE’S CAC 40 UP 0.19%

SPAIN’S IBEX UP 0.33%

EURO STOXX INDEX UP 0.18%; EURO ZONE BLUE CHIPS UP 0.22%

Share The optimistic shock from stronger-than-expected UK GDP mustn't give the federal government an excessive amount of consolation, in accordance with the Nationwide Institute of Financial and Social Analysis (Niesr), a revered financial thinktank.

Donald Trump’s commerce wars are nonetheless a serious supply of uncertainty – not least because the essential US relationship with China continues to be undecided – whereas the tariffs he has undoubtedly imposed will seemingly be a drag on international development. Within the UK, in the meantime, households and companies predict tax will increase on the upcoming finances within the autumn.

Fergus Jimenez-England, an affiliate economist at Niesr, stated:

GDP development was barely greater than forecast, recording 0.4% in June owing to stronger-than-expected development in providers and development. The economic system subsequently grew by 0.3% within the second quarter.

Regardless of this optimistic shock, we anticipate development to stay subdued within the third quarter of this 12 months as uncertainty over fiscal coverage and worldwide commerce continues to weigh on financial exercise.

As outlined in our latest UK financial outlook, the chancellor should construct a considerable fiscal buffer within the autumn finances to keep away from uncertainty plaguing development into subsequent 12 months.

Share Rachel Reeves: stronger-than-expected GDP is 'optimistic' however 'extra to do' Britain's chancellor Rachel Reeves throughout a go to to Studio Ulster in Belfast, Northern Eire, on Tuesday. {Photograph}: Oliver McVeigh/Reuters Rachel Reeves, the chancellor, has welcomed the stronger-than-expected GDP development figures.

Nonetheless, it isn't a powerful celebration, maybe given all the uncertainty within the international economic system.

She stated:

At the moment’s financial figures are optimistic with a powerful begin to the 12 months and continued development within the second quarter. However there's extra to do to ship an economic system that works for working individuals.

I do know that the British economic system has the important thing substances for achievement however has felt caught for too lengthy.

That's the reason we’re investing to rebuild our nationwide infrastructure, slicing again on crimson tape to get Britain constructing once more and boosting the nationwide minimal wage to make work pay. There’s extra to do and at this time’s figures solely gasoline my ambition to ship on our plan for change.

Share UK GDP grew by 0.3% in second quarter because of shock June acceleration Good morning, and welcome to our stay, rolling protection of enterprise, economics and monetary markets.

The UK economic system grew by 0.4% month-on-month in June in accordance with new information that helped the second quarter to finish with better-than-expected output.

British output rose by 0.3% within the second quarter of 2025, the Workplace for Nationwide Statistics stated. That was greater than the 0.1% anticipated by economists polled by Reuters.

The faster-than-expected development was down to higher efficiency from the providers and development sectors, which grew at 0.4% and 1.2% respectively within the quarter – though manufacturing output (which incorporates manufacturing) fell.

Actual GDP per head is estimated to have grown by 0.2% within the newest quarter and is up 0.7% in contrast with the identical quarter a 12 months in the past.

However, it was nonetheless a slowdown in comparison with the primary quarter, when the UK economic system grew by 0.7%. Economists anticipated slower development due to Donald Trump’s commerce battle, which precipitated chaos within the second quarter after his “liberation day” announcement on 2 April.

The UK economic system grew quicker than anticipated within the second quarter of 2025, though it was nonetheless a slowdown from the primary quarter. {Photograph}: Workplace for Nationwide Statistics It is usually unclear whether or not the assistance from the development sector will be sustained, given newer buying managers’ index information for July displaying a steep drop in UK housebuilding.

We’ll have all of the response to the GDP figures this morning.

The agenda 10am BST: Eurozone GDP development fee second estimate (second quarter; earlier: 0.6% quarter-on-quarter; consensus: 0.1%)

10am BST: Eurozone industrial manufacturing (June; earlier: 1.7% month-on-month; consensus: -1%)

1pm BST: US producer value inflation (July; earlier: 0%; consensus: 0.2%)

Share Up to date at 02.55 EDT

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