IoD press release Government spending props up Q2 growth
Commenting on ONS data that showed GDP rose by 0.4% in June 2025, following a decline in GDP of 0.1% growth in May, and by 0.3% in Q2 after growth of 0.7% in Q1, Anna Leach, Chief Economist at the Institute of Directors, said:
“The slowdown in growth in Q2 reflects businesses adjusting activity in response to US tariff changes and UK stamp duty reforms. Even so, growth held up better than expected, supported by strength in ICT and non-market health. On the expenditure side, growth has been driven by government expenditure and capital spending, perhaps reflecting some of the spending that was bumped up in last year’s Budget starting to come through.
“It is good to see a stronger growth outturn than many feared. But it is striking that momentum is coming from the public sector, with consumer spending slowing and business investment contracting. Private sector growth is being held back by both global and domestic policy uncertainty, with speculation over forthcoming tax increases adding to the headwinds. We urge the government to adopt a strategic approach to policy, prioritising removing blockers to growth – particularly in the planning system – and enhancing the efficiency of the tax system.”
