UK economy grew faster than thought in first six months of Labour government – business live

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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.

Illustration: ONS

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%

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).

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.

Photograph: ONS

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

• 7am BST: GDP quarterly national accounts, UK: April to June 2025

• 10.30am BST: European Central Bank president Lagarde speaks at the Bank of Finland’s monetary policy conference

• 3pm BST: US JOLTS vacancies data