UK economic system grew sooner than thought in first six months of Labour authorities – enterprise dwell | Enterprise

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UK progress revisions: what the consultants say Though the upward revisions to UK GDP this morning are welcome, they in all probability received’t save chancellor Reeves from a productiveness downgrade from the UK’s fiscal watchdog, says Paul Dales, chief UK economist at Capital Economics.

The small upward revisions to actual GDP lately partly helps to clarify the power of inflation and implies that productiveness progress wasn’t fairly as weak as beforehand thought. The OBR will take these revisions into consideration forward of the Funds, however they're not possible to forestall the downgrade to the OBR’s productiveness progress forecasts that can contribute to the Chancellor having to boost some cash, probably by way of larger taxes.

The quarterly fee of GDP progress in Q2 2025 was left unrevised at 0.3% q/q, though the annual progress fee was revised up from 1.2% to 1.4%. And in Q2 itself, the form of progress was slightly extra encouraging. Most placing was that the change in enterprise funding was revised from -4.0% q/q to -1.1% q/q. This was offset by smaller contributions to GDP progress from internet commerce, inventories and the alignment adjustment.

Matt Swannell, chief financial advisor to the EY ITEM Membership, factors out that progress has been “very sluggish” since Covid-19:

“GDP progress was confirmed to have slowed to 0.3% in Q2, down from 0.7% initially of the yr. Among the power initially of the yr was the results of ongoing points with residual seasonality, however under the floor, the info paints a weaker image, with Q2 progress closely reliant on authorities spending. Consumption was little greater than flat on the quarter, whereas enterprise funding fell 1.1% as some short-term power from Q1 unwound.

Right now’s launch integrated extra survey and administrative knowledge, and methodological enhancements that brought about revisions way back to 1997. The brand new knowledge leaves the extent of GDP slightly larger, nevertheless it doesn’t change the broader image that the UK economic system has been very sluggish for the reason that pandemic.

Richard Flax, chief funding officer at Moneyfarm, suggests the economic system is “navigating headwinds” higher than thought:

“The ultimate estimate of UK GDP for Q2 confirmed progress of 0.3% quarter-on-quarter, in keeping with expectations, however confirmed a stronger-than-anticipated 1.4% improve year-on-year. This marks an upward revision from the earlier estimate of 1.2% YoY, suggesting that the economic system carried out higher over the previous yr than initially thought.

The firmer annual progress factors to a extra resilient backdrop, supported by sustained power in providers and client spending, at the same time as larger rates of interest continued to weigh on exercise. This resilience means that the UK economic system is navigating headwinds extra successfully than feared.

Wanting forward, momentum within the second half of the yr stays unsure. Weak world demand and protracted price pressures might proceed to behave as a drag, at the same time as households and companies start to learn from disinflation and a stabilising fee setting. By way of fiscal coverage, a barely higher efficiency on financial progress might not do a lot to assist the Chancellor as she tries to stability the books forward of the November funds. We’re nonetheless prone to see a variety of tax will increase within the funds announcement.”

Share Up to date at 03.58 EDT

Playing firm shares drop as Reeves hints at larger taxes Shares in playing firms are dipping initially of buying and selling, after chancellor Rachel Reeves hinted that they might face larger taxes.

Evoke (which owns 888poker and William Hill) has dropped by 1.5%, with Rank Group down 1%.

Entain (the agency behind Ladbrokes, Coral and BetMGM) fell 1.7% on the open in London, earlier than recovering.

Yesterday, Reeves signaled she may very well be open to elevating taxes on the UK’s playing business, which might elevate funds to fund providers or advantages.

She instructed ITV Information:

“I do assume there’s a case for playing companies paying extra.

They make an essential contribution to the economic system however they need to pay their justifiable share of taxes and we’ll be sure that that occurs.”

Share UK GDP per capita stats You get a greater image of a rustic’s dwelling requirements in the event you take a look at GDP per capita (the calculation that divides GDP by inhabitants).

And once more, we are able to see that the image was much less grim than first thought within the first six months of the Labour authorities (and within the final quarter of the Conservatives, earlier than final July’s election).

GDP per capita in July-September 2024 rose by 0.1%, relatively than shrinking by 0.1% as first thought.

In October-December, GDP per capita additionally rose by 0.1%, having beforehand been estimated as 0%.

Nonetheless, GDP per capita in January-March this yr has been revised right down to 0.5% from 0.6%, although the estimte for GDP is unchanged.

Illustration: ONS Share Estimates for UK enterprise funding within the final quarter have additionally been revised larger.

Enterprise funding is estimated to have fallen by 1.1% in Quarter 2 2025, revised up from the primary estimate fall of 4.0%. This follows a 4.1% improve in January-March.

Share Annual progress sooner than estimated too This morning’s revisions imply UK progress during the last yr was sooner than estimated.

GDP on a year-on-year foundation was 1.4% larger than a yr in the past in Q2 2025, up from a earlier estimate of 1.2%

UK GDP Q2 Last Q/Q +0.3% (est +0.3%, final +0.3%)UK GDP Q2 Last Y/Y +1.4% (est +1.2%, final +1.2%)

— Mario Cavaggioni (@CavaggioniMario) September 30, 2025

Share Family financial savings fee rises as customers flip cautious UK households saved more cash within the second quarter of this yr – presumably an indication of warning concerning the financial outlook.

The households’ saving ratio is estimated to have elevated to 10.7% in Quarter 2 2025, up from 10.5% within the first quarter of this yr, as a consequence of an increase in non-pension saving.

Thomas Pugh, chief economist at main audit, tax and consulting agency RSM UK says:

“As anticipated, headline GDP progress in Q2 was unchanged at 0.3% q/q. However the improve within the saving ratio suggests customers turned extra cautious within the second quarter. The large query now's whether or not hypothesis concerning the funds will undermine confidence additional.

“Headline progress remained at 0.3% in Q2. However the saving fee elevated from an already excessive 10.5% to 10.7%. This was pushed by a rise in non-pension saving suggesting that client warning after April’s tax and tariff will increase prompted households to avoid wasting extra. Certainly, family spending progress remained weak at simply 0.1% q/q.

Share There’s some disappointing information in immediately’s GDP report, although – the manufacturing sector suffered a sharper downturn within the final quarter, and the constructing sector grew extra slowly than estimated.

The manufacturing sector is estimated to have fallen by 0.8% in Quarter 2 2025 (beforehand estimated as a 0.3% fall), the ONS experiences. This downturn was pushed by decrease energy technology and fuel manufacturing.

Providers output elevated by an unrevised 0.4% in Quarter 2 2025,

And building output is estimated to have grown by 1.0% in Quarter 2 2025 (beforehand a 1.2% improve).

Building output for Q2 2025 was revised down from the @ONS earlier estimate of 1.2% to 1%. New Infrastructure work continued to prop up progress, rising 2.9% alongside restore and upkeep of personal housing, which grew 4.4%. pic.twitter.com/zSkOr3a85F

— Emma Fildes (@emmafildes) September 30, 2025

Share Introduction: UK progress in early months of Labour authorities revised up Good morning, and welcome to our rolling protection of enterprise, the monetary markets and the world economic system.

Britain’s economic system has grown sooner than first estimated within the first six months of the Labour authorities.

Up to date financial knowledge launched this morning exhibits that the economic system didn't stagnate within the third quarter of final yr, as Keir Starmer, Rachel Reeves and colleagues took the helm with gloomy warnings concerning the problem forward.

Having beforehand mentioned GDP was flat in July-September 2024, the Workplace for Nationwide Statistics has recrunched the numbers and concluded the economic system really grew by 0.2% – modest progress, however higher than none in any respect.

Development in October-December 2024 has additionally been revised up, from 0.1% to 0.2%.

The efficiency of the economic system within the final six months of Conservative rule has additionally been revised. Development in Q1 2024 has been minimize from 0.9% to 0.8%, whereas progress in April-June 2024 has been revised up from 0.5% to 0.6%.

Though these modifications are minor, and historic, they do undermine the narrative that fears over Reeves’s funds plans chilled the economic system to a standstill final yr.

One thing for Labour to ponder at their social gathering convention this week, the place the prime minister is predicted to inform members that his financial technique might be the “antidote to division”.

GDP figures for 2025 haven't been revised although – the economic system nonetheless grew by 0.7% in January-March, slowing to 0.3% in April-June.

{Photograph}: ONS And the massive image is that the extent of GDP in Quarter 2 2025 in contrast with Quarter 4 (Oct to Dec) 2023 is now estimated to be 2.9% larger, revised up from the primary estimate of two.6%, the ONS says.

ONS director of financial statistics Liz McKeown explains:

“Right now’s figures embrace a collection of enhancements to our measurement of the economic system, together with higher info on analysis and growth and the actions of complicated multinational firms, alongside the same old inclusion of up to date and improved knowledge sources.

“Development for 2024 as an entire is unrevised, although these new figures present the economic system grew rather less strongly initially of final yr than our preliminary estimates instructed however carried out higher in later quarters. Quarterly progress charges for 2025 are unrevised.