The UK economy showed surprising resilience in June, with GDP growing by 0.4%, but the bigger picture reveals a significant slowdown in the second quarter of 2025. This mixed data highlights an economy navigating the pressures of higher business costs and global trade uncertainties, while also offering glimmers of underlying strength.
A Tale of Two Speeds: Monthly Rebound vs. Quarterly Slowdown
The latest figures from the Office for National Statistics (ONS) present a complex view of the UK’s economic health:
- Strong June Performance: Monthly GDP grew by a better-than-expected 0.4% in June, rebounding after contractions in April and May. This growth was broad-based, with the services, production, and construction sectors all expanding.
- Quarterly Growth Slows: For the second quarter (April to June) as a whole, GDP grew by 0.3%. While this was stronger than the 0.1% forecast by many economists, it marks a considerable slowdown from the robust 0.7% growth seen in the first quarter of the year.
- Reason for the Slowdown: The ONS and analysts suggest that some economic activity was brought forward into the first quarter as businesses prepared for stamp duty changes and the introduction of US tariffs, leading to a weaker April and May.
Sector Performance and Business Reaction
The services sector was the main driver of growth in June, with strong performances in computer programming, scientific research, and health. The construction sector also showed robust growth of 1.2% across the quarter. However, the business community remains cautious.
- Business Confidence is Fragile: The Confederation of British Industry (CBI) responded to the figures by stating that “underlying conditions remain fragile” and that the UK is “walking a narrow path between resilience and stagnation.”
- Government Spending a Key Driver: The Institute of Directors (IoD) noted that growth in the second quarter was largely driven by government expenditure and capital spending.
- Market Reaction: The better-than-expected data provided some support for the pound sterling, though the FTSE 100 had a sluggish start to the day as some major companies went ex-dividend.
Chancellor Rachel Reeves acknowledged the figures were “positive” but reiterated that there is “more to do” to drive sustainable long-term growth.
Financing Business Growth in a Slowing Economy
The current economic climate—characterised by sluggish but resilient growth, mounting business costs, and policy uncertainty—requires businesses to be agile and strategic. Securing the right finance is crucial for navigating challenges and seizing opportunities. Information on government support and finance options can be a useful starting point. Working with a specialist finance broker provides access to a wide network of lenders and tailored solutions. With connections to over 95 lenders, brokers can help you navigate the market effectively.
Key finance solutions for the current climate include:
- Working Capital Loans: To manage cash flow through periods of uncertainty and cover rising operational costs.
- Business Loans for Investment: For businesses in growing sectors (like construction or specific services) looking to invest in new equipment, technology, or staff to meet demand.
- Invoice Finance: To unlock cash tied up in unpaid invoices, ensuring a steady flow of funds to run the business.
- Asset Finance: A cost-effective way to acquire essential equipment without a large upfront capital outlay.
Partnering with a finance broker simplifies finding and applying for the right funding. They can assess your business’s specific needs against the backdrop of the current economic data and connect you with the most appropriate lenders. For further impartial advice, explore resources from the British Business Bank and guides like the ICAEW Business Finance Guide.
Conclusion
While the UK economy avoided stagnation in the second quarter of 2025 with better-than-expected growth, the significant slowdown from the start of the year is a clear sign of the pressures businesses are under. The strong monthly rebound in June offers hope that the recent weakness may have been a temporary blip. However, with business costs high and confidence subdued, strategic financial planning and access to flexible funding will be essential for businesses to navigate the path ahead and contribute to a more robust economic recovery.
Is your business planning for growth or looking to navigate the current economic climate? Explore tailored finance solutions today and connect with our network of over 95 lenders to find the perfect fit for your needs.