Unexpected Gains in Services and Construction Propel Q2 Growth

UK Economy Gots a Little Hiccups – but It’s Still Holding On

In a whirlwind update, the latest figures show the UK’s GDP gave the green light in June, posting a modest 0.4 % rise. That jump was primarily powered by services (think the grass‑roots of everyday life) and a bump in construction – the builders finally got their groove on.

Second‑Quarter Snapshot

Overall Q2 growth rolled up to a friendly 0.3 %, a tidy recovery from the blips seen in April and May.
The buoyant climb was largely thanks to government spending. Household consumption, unfortunately, took a slow‑mo step, while investment in fixed assets took a dip.
Despite the uneven mix, the pattern keeps the UK on a low‑but‑steady economic runway.

What the Forecasts Say

We’re looking ahead and expect another sweet rise to a 0.5 % uptick in the third quarter, buoyed by supportive fiscal moves and a gentle tap‑down in the labour‑market heat‑up. Speaking of which, it looks like the market is cooling, not cooling off – the job‑seeker playlist is still running, just slower.

For the whole year, GDP is tipped to grow by about 1.3 %. The chief engine behind this is gov spending plus that strong spring surge in business investment. In the dragon‑ball style of forecasts, the risks are more of a downside‑shoot: policy uncertainty, trade jitters, and the ever‑twitchy public‑finance ledger.

Global & Fiscal Side Notes

International conflicts ≈ nasty drop‑in on growth.
Tariff foggy unknowns also add a pinch of risk.
Fiscal tightening, potentially in the Autumn Budget, is the major spoiler: a cut‑back flex might undercut activity mid‑year. An even steeper interest‑rate outlook would further strain the delicate fiscal balance.

Labour Market Low‑Down

The labour market is showing respite – not a collapse. There’s a dip of only -0.03 % in payrolled employment in July. That’s tiny and might even get revised up later. The key takeaway: unemployment is stirring up activity, powered more by people stepping back into the workforce than mass layoffs.

Expert Take

Fergus Jimenez‑England, an Associate Economist at NIESR, gives us the full picture: “GDP growth nudged up a touch in June thanks to a surprise boost in services and construction. The second quarter still held a positive bump, but the third quarter is expected to remain a bit subdued because fiscal policy and international trade still bring in some uncertainty. The Chancellor’s upcoming Autumn Budget should aim to build a solid fiscal buffer to keep growth from wobbling into next year.”