UK Economy Expected to Show Modest Growth in Q2 2025

The UK economy is expected to show moderate growth for Q2 2025, according to forecasts from major financial institutions. A Reuters poll in early July projected a quarter-on-quarter expansion of 0.2% for Q2, down from the 0.3% growth recorded in Q1.

Services are expected to remain the primary driver of growth, supported by consumer spending on hospitality and leisure. In contrast, manufacturing and construction have shown weakness, with the latter contracting for three consecutive months through May, according to PMI surveys.

The Bank of England's monetary policy remains a key factor in this forecast. The central bank has signaled a cautious approach to future rate cuts, citing persistent services inflation and wage growth. Financial markets currently price in a 60% probability of a 25-basis-point cut at the August meeting.