UK Economy Shows Resilience Amid Trump Tariffs and Rising Costs

The UK economy expanded by 0.3% in the second quarter of 2025, a slowdown from the 0.7% growth seen earlier in the year as businesses grappled with higher costs and the impact of US tariffs. Despite the deceleration, the figure surpassed economist forecasts of 0.1%, offering cautious optimism for Chancellor Rachel Reeves. Key sectors like computer programming, healthcare, and vehicle leasing fueled the growth, while June saw strong performances in scientific research and electronics production.

Rising energy bills, council taxes, and employer contributions to national insurance dampened economic activity in April and May. Consumers pulled back spending after front-loading purchases ahead of tariff changes and stamp duty adjustments. The services sector remained resilient, but businesses faced squeezed margins due to increased minimum wages and trade uncertainties stemming from Trump’s policies.

Chancellor Reeves welcomed the ’positive’ figures but acknowledged more work was needed to sustain growth. Her government plans infrastructure investments, regulatory reforms, and further minimum wage hikes to stimulate the economy. While the UK showed unexpected resilience, the combination of global trade tensions and domestic cost pressures continues to challenge policymakers balancing growth and inflation concerns.

UK economyGDP growthTrump tariffsbusiness costsinflationRachel ReevesONStrade warminimum wageeconomic resilience