Despite the slowing but better-than-expected growth of Britain's economy in the second quarter, analysts and economists cautioned that future momentum remains weak, with a dim outlook for investment, employment and consumption.

by Zhao Yang, Larry Neild

LONDON, Aug. 14 (Xinhua) -- Britain's economic growth slowed in the second quarter of 2025 as some activity had been "brought forward" ahead of higher U.S. tariffs. Despite the slight but better-than-expected rise, analysts and economists cautioned that future momentum remains weak, with a dim outlook for investment, employment and consumption.

The country's GDP rose 0.3 percent between April and June, lower than the 0.7 percent increase in the first quarter, according to data released by the Office for National Statistics (ONS) on Thursday.

"Some activity was brought forward to February and March ahead of changes to stamp duty in April and announced U.S. tariff changes," the ONS explained.

Growth in the second quarter was driven by a 1.2 percent increase in construction mainly backed by robust gains in new infrastructure work and private housing repair and maintenance, as well as a 0.4 percent rise in services with computer programming, health and vehicle leasing growing, which helped offset a 0.3 percent drop in the production sector and a sharp decline in wholesale and retail trade, the ONS said.

Despite the slight growth beating the 0.1 percent rise forecast by the Bank of England, industry analysts and economic experts cautioned about the downside risks of the economy in multiple fields, including investment, employment and consumption, amid headwinds from home and abroad.

The numbers mask the underlying pain being felt by businesses across the UK, research director at the British Chambers of Commerce Stuart Morrison alerted.

"We saw better than expected growth at the start of the year, largely because of stockpiling ahead of U.S. tariffs. However, tax burdens at home, alongside uncertain global trading conditions, created a very challenging environment for the UK's small and medium-sized enterprises in Q2," Morrison said, "without thriving firms the economy will continue to struggle."

"The UK economy is still bumping along the bottom with negligible growth and is likely to face further headwinds from the need to deal with shaky public finances," said Iain Begg, professor at the London School of Economics and Political Science, noting, "A small cut in interest rates last week will help a little, but the Bank of England seems to be hesitant about further cuts in the near future because of stubborn inflation."

Anna Leach, chief economist at the Institute of Directors, found it striking that the growth momentum comes from the public sector, with consumer spending slowing and business investment contracting.

Tina McKenzie, policy chair of the Federation of Small Businesses, warned that the GDP figures will be "no comfort to small firms and everyone under pressure in the real economy," with rising costs, barriers to finance and high business rates all draining investment and hampering growth.

"Our latest Small Business Index shows how for the first time since records began, more small firms are bracing for contraction, closure or sale over the next year than those expecting to grow," she added, underlining that when small firms pause hiring or shelve investment plans, it directly feeds into the national growth picture.

David Bailey, professor at the University of Birmingham, noted that U.S. tariffs slow economic growth globally and are impacting Britain's export-driven sectors, such as the automotive industry, investment and job hiring.

Higher employment taxes on firms and policy uncertainty over possible future tax rises have reinforced global pressures from tariffs, further limiting employment, David Spencer, professor at the University of Leeds said, adding, "The worry is that unemployment rises and the economy stagnates."

Britain's labor market showed further signs of cooling in the second quarter, with job vacancies and payrolled employees both declining. The unemployment rate stood at 4.7 percent, the highest in four years, according to data released Tuesday by the ONS.

In a recent report, EY ITEM Club predicted that persistent uncertainty in the global economy, alongside tightening fiscal policy and a weakening labor market, will continue to weigh on British economic momentum. It forecasts that the country's GDP growth will remain subdued until 2027.