UK economy is slowing not shrinking, with GDP per person increasing by 0.7 per cent since the election 14 August 2025 GDP growth slowed to 0.3 per cent in Q2 2025 – a stronger performance than both market expectations and the Bank of England’s forecast last week. But the good news will not avoid a deep fiscal bind for the Chancellor at her Autumn Budget, the Resolution Foundation said today (Thursday) in response to the latest ONS GDP data. The better-than-expected figures were driven by a strong economic performance in June, with GDP increasing by 0.4 per cent following falls in April and May. This offers hope that the poor economic performance in previous months was a blip rather than a sign of things to come. However, the UK’s long-term performance remains weak. GDP per capita – the metric that better tracks changes in living standards – has increased by 0.7 per cent over the past 12 months. While stronger than post-financial average of 0.48 per cent a year, this is weaker than the 2010s average of 1.3 per cent, and a far cry from the 2.5 per cent growth in the pre-financial crisis period (1993-2008). Despite today’s better-than-expected data, the Office for Budget Responsibility remains likely to downgrade its economic outlook alongside the Autumn Budget. James Smith, Research Director at the Resolution Foundation, said: “Yet again, economic growth in the UK has slowed after a strong start to the year. But the better-than-expected growth in June offers hope that the recent slowdown may be a blip rather than a sign of things to come. “Despite the good short-term news, the UK’s longer-term economic record remains poor. There is a significant risk that the OBR downgrades its economic outlook, and in doing so tighten the Chancellor’s fiscal bind in her upcoming Budget.”
