Key events
UK growth revisions: what the experts say
Although the upward revisions to UK GDP this morning are welcome, they probably won’t save chancellor Reeves from a productivity downgrade from the UK’s fiscal watchdog, says Paul Dales, chief UK economist at Capital Economics.
The small upward revisions to real GDP in recent years partly helps to explain the strength of inflation and means that productivity growth wasn’t quite as weak as previously thought. The OBR will take these revisions into account ahead of the Budget, but they are very unlikely to prevent the downgrade to the OBR’s productivity growth forecasts that will contribute to the Chancellor having to raise some money, most likely via higher taxes.
The quarterly rate of GDP growth in Q2 2025 was left unrevised at 0.3% q/q, although the annual growth rate was revised up from 1.2% to 1.4%. And in Q2 itself, the shape of growth was a little more encouraging. Most striking was that the change in business investment was revised from -4.0% q/q to -1.1% q/q. This was offset by smaller contributions to GDP growth from net trade, inventories and the alignment adjustment.
Matt Swannell, chief economic advisor to the EY ITEM Club, points out that growth has been “very sluggish” since Covid-19:
“GDP growth was confirmed to have slowed to 0.3% in Q2, down from 0.7% at the start of the year. Some of the strength at the start of the year was the result of ongoing issues with residual seasonality, but below the surface, the data paints a weaker picture, with Q2 growth heavily reliant on government spending. Consumption was little more than flat on the quarter, while business investment fell 1.1% as some temporary strength from Q1 unwound.
Today’s release incorporated additional survey and administrative data, and methodological improvements that caused revisions as far back as 1997. The new data leaves the level of GDP a little higher, but it doesn’t change the broader picture that the UK economy has been very sluggish since the pandemic.
Richard Flax, chief investment officer at Moneyfarm, suggests the economy is “navigating headwinds” better than thought:
“The final estimate of UK GDP for Q2 confirmed growth of 0.3% quarter-on-quarter, in line with expectations, but showed a stronger-than-anticipated 1.4% increase year-on-year. This marks an upward revision from the previous estimate of 1.2% YoY, suggesting that the economy performed better over the past year than initially thought.
The firmer annual growth points to a more resilient backdrop, supported by sustained strength in services and consumer spending, even as higher interest rates continued to weigh on activity. This resilience suggests that the UK economy is navigating headwinds more effectively than feared.
Looking ahead, momentum in the second half of the year remains uncertain. Weak global demand and persistent cost pressures may continue to act as a drag, even as households and businesses begin to benefit from disinflation and a stabilising rate environment. In terms of fiscal policy, a slightly better performance on economic growth may not do much to help the Chancellor as she tries to balance the books ahead of the November budget. We’re still likely to see a range of tax increases in the budget announcement.”
Gambling company shares drop as Reeves hints at higher taxes
Shares in gambling companies are dipping at the start of trading, after chancellor Rachel Reeves hinted that they could face higher taxes.
Evoke (which owns 888poker and William Hill) has dropped by 1.5%, with Rank Group down 1%.
Entain (the firm behind Ladbrokes, Coral and BetMGM) fell 1.7% at the open in London, before recovering.
Yesterday, Reeves signaled she could be open to raising taxes on the UK’s gambling industry, which could raise funds to fund services or benefits.
She told ITV News:
“I do think there’s a case for gambling firms paying more.
They make an important contribution to the economy but they should pay their fair share of taxes and we’ll make sure that that happens.”
UK GDP per capita stats
You get a better picture of a country’s living standards if you look at GDP per capita (the calculation that divides GDP by population).
And again, we can see that the picture was less grim than first thought in the first six months of the Labour government (and in the last quarter of the Conservatives, before last July’s election).
GDP per capita in July-September 2024 rose by 0.1%, rather than shrinking by 0.1% as first thought.
In October-December, GDP per capita also rose by 0.1%, having previously been estimated as 0%.
However, GDP per capita in January-March this year has been revised down to 0.5% from 0.6%, even though the estimte for GDP is unchanged.
Estimates for UK business investment in the last quarter have also been revised higher.
Business investment is estimated to have fallen by 1.1% in Quarter 2 2025, revised up from the first estimate fall of 4.0%. This follows a 4.1% increase in January-March.
Annual growth faster than estimated too
This morning’s revisions mean UK growth over the last year was faster than estimated.
GDP on a year-on-year basis was 1.4% higher than a year ago in Q2 2025, up from a previous estimate of 1.2%
UK GDP Q2 Final Q/Q +0.3% (est +0.3%, last +0.3%)
UK GDP Q2 Final Y/Y +1.4% (est +1.2%, last +1.2%)— Mario Cavaggioni (@CavaggioniMario) September 30, 2025
Household savings rate rises as consumers turn cautious
UK households saved more money in the second quarter of this year – possibly a sign of caution about the economic outlook.
The households’ saving ratio is estimated to have increased to 10.7% in Quarter 2 2025, up from 10.5% in the first quarter of this year, due to a rise in non-pension saving.
Thomas Pugh, chief economist at leading audit, tax and consulting firm RSM UK says:
“As expected, headline GDP growth in Q2 was unchanged at 0.3% q/q. But the increase in the saving ratio suggests consumers turned more cautious in the second quarter. The big question now is whether speculation about the budget will undermine confidence further.
“Headline growth remained at 0.3% in Q2. But the saving rate increased from an already high 10.5% to 10.7%. This was driven by an increase in non-pension saving suggesting that consumer caution after April’s tax and tariff increases prompted households to save more. Indeed, household spending growth remained weak at just 0.1% q/q.
There’s some disappointing news in today’s GDP report, though – the production sector suffered a sharper downturn in the last quarter, and the building sector grew more slowly than estimated.
The production sector is estimated to have fallen by 0.8% in Quarter 2 2025 (previously estimated as a 0.3% fall), the ONS reports. This downturn was driven by lower power generation and gas production.
Services output increased by an unrevised 0.4% in Quarter 2 2025,
And construction output is estimated to have grown by 1.0% in Quarter 2 2025 (previously a 1.2% increase).
Construction output for Q2 2025 was revised down from the @ONS previous estimate of 1.2% to 1%. New Infrastructure work continued to prop up growth, increasing 2.9% alongside repair and maintenance of private housing, which grew 4.4%. pic.twitter.com/zSkOr3a85F
— Emma Fildes (@emmafildes) September 30, 2025
Introduction: UK growth in early months of Labour government revised up
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Britain’s economy has grown faster than first estimated in the first six months of the Labour government.
Updated economic data released this morning shows that the economy did not stagnate in the third quarter of last year, as Keir Starmer, Rachel Reeves and colleagues took the helm with gloomy warnings about the challenge ahead.
Having previously said GDP was flat in July-September 2024, the Office for National Statistics has recrunched the numbers and concluded the economy actually grew by 0.2% – modest growth, but better than none at all.
Growth in October-December 2024 has also been revised up, from 0.1% to 0.2%.
The performance of the economy in the last six months of Conservative rule has also been revised. Growth in Q1 2024 has been cut from 0.9% to 0.8%, while growth in April-June 2024 has been revised up from 0.5% to 0.6%.
Although these changes are minor, and historic, they do undermine the narrative that fears over Reeves’s budget plans chilled the economy to a standstill last year.
Something for Labour to ponder at their party conference this week, where the prime minister is expected to tell members that his economic strategy can be the “antidote to division”.
GDP figures for 2025 have not been revised though – the economy still grew by 0.7% in January-March, slowing to 0.3% in April-June.
And the big picture is that the level of GDP in Quarter 2 2025 compared with Quarter 4 (Oct to Dec) 2023 is now estimated to be 2.9% higher, revised up from the first estimate of 2.6%, the ONS says.
ONS director of economic statistics Liz McKeown explains:
“Today’s figures include a suite of improvements to our measurement of the economy, including better information on research and development and the activities of complex multinational companies, alongside the usual inclusion of updated and improved data sources.
“Growth for 2024 as a whole is unrevised, though these new figures show the economy grew a little less strongly at the start of last year than our initial estimates suggested but performed better in later quarters. Quarterly growth rates for 2025 are unrevised.
The agenda
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7am BST: GDP quarterly national accounts, UK: April to June 2025
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10.30am BST: European Central Bank president Lagarde speaks at the Bank of Finland’s monetary policy conference
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3pm BST: US JOLTS vacancies data
