Britain’s economy grew faster than previously estimated in the second quarter, helped by stronger services activity and a boost from hot weather and the start of the World Cup, although economists warned that the impact of higher energy and fuel prices could weigh heavily on growth later this year.
Gross domestic product increased by 0.5% between April and June, according to revised figures from the Office for National Statistics, up from its previous estimate of 0.4%. The stronger performance was driven primarily by services, which expanded by 0.6% over the quarter.
The figures mean the economy has so far proved more resilient than expected despite the disruption caused by the Iran war and heightened uncertainty across energy markets.
However, the revised data also showed that Britain’s underlying growth performance was weaker than previously thought. GDP growth for 2025 as a whole was revised down to 1.2%, from the earlier estimate of 1.3%.
Liz McKeown, ONS director of economic statistics, said: “Growth for 2025 as a whole was a little lower than previously estimated, with the profile of growth across the quarters also revised.
“However, stronger services growth in the latest quarter means the economy is now slightly larger than previously estimated.”
The upgrade to second-quarter growth was helped by services firms reporting stronger trading in June, with the ONS pointing to prolonged hot weather and the start of the World Cup as factors supporting activity.
But economists are increasingly concerned that the stronger first half of the year will not be sustained.
Surging petrol and diesel prices, alongside higher household energy costs linked to the disruption in global energy markets following the Iran war, are expected to squeeze household spending and business activity.
Cornwall Insight warned this week that a typical household’s annual energy bill could rise by 16% in January, marking the biggest increase in four years.
Most economists are forecasting growth of around 1.2% for the UK economy this year. That would imply virtually no expansion during the second half, according to Martin Beck, chief economist at WPI Strategy.
“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,” he said.
The economy nevertheless entered the third quarter on a stronger footing than expected. Separate ONS figures showed GDP expanded by 0.4% in July, confounding expectations of a slowdown and providing an early indication that the economy retained some momentum after the second-quarter expansion.
The July performance was supported in part by continued investment linked to the artificial intelligence boom.
Taken together, the latest figures point to an economy that has continued to expand despite a series of external shocks, but with households and businesses facing a more difficult environment as the year progresses.
The challenge for policymakers will be whether the resilience seen during the summer can withstand the combined pressure of higher energy costs, expensive fuel and uncertainty ahead of the Budget.
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