The UK economy surprised many analysts with a modest but notable growth in the second quarter of 2025. While some sectors showed resilience, others remain weak, raising questions about the sustainability of this growth. In this page, we'll explore what drove the unexpected expansion, which industries are leading the way, and what this means for the UK's economic future.
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What caused the UK economy to grow more than expected?
UK GDP increased by 0.3% in Q2, driven mainly by strong performance in the services and manufacturing sectors. Despite ongoing economic challenges, consumer spending and exports showed resilience, helping to boost overall growth. However, factors like global trade tensions and domestic policy issues still cast a shadow over the economy's stability.
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Which sectors are leading this economic growth?
The main drivers of the UK's recent growth are the services sector, including finance and retail, along with manufacturing. These sectors benefited from increased consumer confidence and export activity, helping to offset weaknesses in business investment and employment.
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Is this growth sustainable or just a temporary boost?
While the recent growth is encouraging, experts warn it may be temporary. Ongoing global trade tensions, domestic fiscal debates, and structural weaknesses like low business investment suggest that the UK’s economic recovery remains fragile and uneven.
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How does this growth impact Brexit and trade policies?
The growth could influence future trade negotiations and Brexit policies by demonstrating resilience in certain sectors. However, persistent trade tensions and uncertainties mean policymakers must navigate carefully to sustain this momentum and avoid setbacks.
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What are the risks to the UK economy going forward?
Key risks include global trade disputes, domestic political instability, and weak business investment. These factors could slow down or reverse recent gains, making it crucial for policymakers to address structural issues and foster a more resilient economy.