The Office for National Statistics has revised second‑quarter GDP growth upward to 0.5 %, up from an earlier estimate of 0.4 %, citing stronger services output and a boost from warm weather and the start of the World Cup. The upgrade leaves the British economy slightly larger than previously thought, even as annual growth for 2025 was trimmed back to 1.2 % from 1.3 %.
Q2 Growth Revised Upward
Between April and June, gross domestic product expanded by 0.5 %, according to the latest ONS figures. Liz McKeown, the ONS director of economic statistics, noted that “growth for 2025 as a whole was a little lower than previously estimated, with the profile of growth across the quarters also revised.” She added that “stronger services growth in the latest quarter means the economy is now slightly larger than previously estimated.” The revision follows a 0.6 % rise in the opening quarter of the year.
Services Sector and Weather Boost
Services sector output was the main driver of the upward revision, expanding at an upwardly revised 0.6 % in the second quarter. The ONS highlighted that June saw a particular bump as firms reported buoyant trade thanks to prolonged hot weather and the commencement of the World Cup football tournament. In July, the economy recorded a surprise 0.4 % increase, which analysts attributed to a surge in AI‑related spending that gave the third quarter a more resilient start than anticipated.
Outlook Clouded by Energy Costs
Despite the upbeat data, analysts warn that the second half of 2026 could see little to no expansion. Martin Beck, chief economist at WPI Strategy, cautioned that “high petrol prices, rising household energy bills and uncertainty ahead of the Budget are likely to take some momentum out of growth over the coming months.” Cornwall Insight’s latest forecast projects annual household energy bills could jump by 16 % in January – the steepest rise in four years – as the Iran conflict continues to fuel price pressures. Most economists now expect full‑year growth of around 1.2 %, which would translate to virtually no expansion in the latter half of the year.
Why it Matters
The modest upward revision to Q2 GDP offers a brief reprieve for policymakers, but the looming energy‑cost surge threatens to stall any momentum just as the government prepares its autumn Budget. With household budgets set to squeeze tighter and business confidence potentially dampened, the UK’s growth trajectory hinges on how quickly energy prices stabilise and whether fiscal measures can offset the drag on consumer spending. The coming months will test the resilience of an economy that has so far defied broader gloom, yet remains vulnerable to external shocks.
