Infographic showcasing month-on-month growth of UK's GDP and sector performance.
United Kingdom, August 14, 2025
The UK economy showcased surprising growth in June, with a month-on-month increase of 0.4%, exceeding economists’ expectations. The services and construction sectors drove this progress, marking a significant positive shift. However, challenges remain in production, while concerns about potential economic downturns loom. The unexpected growth could impact monetary policy decisions moving forward, potentially affecting interest rates and tax policies. Despite the positive GDP report, the FTSE 100 showed no significant gains, indicating lingering market uncertainties.
The UK economy grew by 0.4% month-on-month in June 2025, pushing quarter-on-quarter output up 0.3% in the second quarter — well ahead of the 0.1% many forecasters had expected. The surprise was driven by strong performances in the services and construction sectors, while overall production, including manufacturing, slipped during the same period.
The main engines of growth were services and construction. Within services, hospitality and leisure made notable contributions: hotel and restaurant output rose 2.4% quarter-on-quarter, marking the first positive growth in that area in several years. Construction posted a robust rise of 1.2%, helping to offset weakness in production and manufacturing.
The numbers suggest firms were able to produce more with fewer staff in some areas, pointing to improved productivity in parts of the economy. This was particularly evident in hospitality, where output rose even as employers cut job numbers. Public finances and policy also played a role: fiscal support helped the economy hold up despite external shocks such as US tariffs and domestic tax increases.
Economists described the figures as a clear upside surprise to expectations. That stronger-than-expected growth may push back plans to reduce interest rates: the central bank’s next rate cut could be delayed until next year. Financial markets did not react strongly to the data; the main UK share index started lower, down about 0.3% in early trading despite the surprise.
The government is expected to focus on measures to lift productivity and cut red tape in the upcoming autumn budget. The unexpected resilience of GDP could give officials more room to avoid the most pessimistic tax rises that had been forecast. Analysts say this data may make some tax increases less likely and could boost confidence in official projections of a pickup in productivity.
Several large firms released strong results around the same time as the GDP update. One insurer reported a large jump in profit, making it one of the biggest risers on the main index, while another major insurer posted a double-digit rise in operating profit for the first half of 2025. In energy infrastructure, a major grid operator agreed to sell an LNG business for about £1.7 billion.
Second-quarter growth was slower than the 0.7% recorded in the first quarter, so the economy is not yet back to a sustained high-growth path. European industrial production fell 1.3% month-on-month in June, underlining uneven performance across regions. Ongoing uncertainty about tax policy, possible regulatory changes, and international trade pressures mean growth in the third quarter remains far from assured.
June’s data offers a welcome boost for the economy after a period of slower expansion. Strong services and construction growth helped offset weakness in production, and per-person output edged higher. But the path ahead still carries risks: policy choices, business investment, and global demand will determine whether the recovery strengthens or cools.
Month-on-month GDP rose by 0.4%. On a quarterly basis, output grew 0.3% in Q2 2025, beating forecasts that expected slower growth.
The services sector and construction were the main drivers. Services grew about 0.4% and construction climbed roughly 1.2%. Hospitality and restaurants were notable contributors.
No. Production, including manufacturing, fell during the period and did not share in the overall gain.
The stronger data reduces pressure to cut rates quickly. Policymakers may delay further rate reductions, possibly until next year, depending on future data.
Not necessarily. The stronger growth could make large tax increases less likely, and officials may be less inclined to raise taxes as much as previously forecast. But policy decisions in the autumn budget will determine the outcome.
Despite the upbeat GDP figures, the main share index opened lower, down about 0.3%, with some company results moving stock prices individually.
| Measure | Value | Notes |
|---|---|---|
| Monthly GDP (June 2025) | +0.4% | Month-on-month increase |
| Quarterly GDP (Q2 2025) | +0.3% | Exceeded expectations of +0.1% |
| Services | +0.4% | Main driver of growth |
| Construction | +1.2% | Strong quarterly gain |
| Production (incl. manufacturing) | Declined | Offset some of the service and construction gains |
| Real GDP per head | +0.2% q/q; +0.7% y/y | Output per person improved slightly |
| Market reaction | FTSE down ~0.3% | Index fell despite positive GDP surprise |
Sheboygan Falls, Wisconsin, August 29, 2025 News Summary Marcus & Millichap Capital Corporation arranged an $8.7…
Charleston, SC, August 29, 2025 News Summary The Housing Authority of the City of Charleston closed…
Cape Coral, Florida, August 29, 2025 News Summary Cape Coral city council approved a set of…
Hoboken, New Jersey, August 29, 2025 News Summary A $162 million senior construction loan has closed…
St. Louis, Missouri, August 29, 2025 News Summary Ralph Korte, founder of a prominent Midwestern construction…
Southeast Asia, August 29, 2025 News Summary A global construction software company is expanding its digital…