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Investing.com - The U.K. economy grew more than expected in June, after two months of contraction, but expansion still slowed in the second quarter of the year.
Data released earlier Thursday by the Office for National Statistics showed that U.K. gross domestic product rose by 0.3% from April to June, above the 0.1% growth forecast, but still a hefty slowdown from the 0.7% growth seen in the first quarter.
Still, the country’s economy expanded by 0.4% in June on a month-on-month basis, an improvement from the contraction of 0.1% in May and the fall of 0.3% in April, which was the biggest decline since October 2023. This was also ahead of the 0.1% growth than had been expected.
On an annual basis, the U.K. economy expanded by 1.2% in the second quarter, retreating from growth of 1.3% seen in the first three months of the year.
The slowdown in the second quarter partly reflects distortions caused by U.S. President Donald Trump’s tariffs announcement in April, as exporters rushed to supply goods to the U.S. in the first few months of the year. But, that is likely to have fallen back since, depressing growth.
Business surveys have also suggested that the government’s own measures, such as higher taxes and a larger minimum wage, have been squeezing businesses, hitting job creation and depressing output.
These figures will create difficulty for Chancellor Rachel Reeves, given they cover the end of her first year in charge of the economy and she has repeatedly said her “number one aim” is to “kickstart economic growth”.
The economy had fallen into recession at the end of 2023 but rebounded in the first half of 2024. Since then, growth has been sluggish.
Yet she is widely expected to raise taxes for a second year in a row to get the government back on track to meet her fiscal rules when she delivers her annual tax and spending plan in October or November.