Britain’s economy expanded 0.3% in the second quarter of 2025, slowing from the 0.7% pace seen at the start of the year but topping economists’ forecasts for a far weaker reading, according to preliminary data from the Office for National Statistics. The modest growth was led by a 0.4% increase in services and a 1.2% rise in construction, which together offset a 0.3% contraction in manufacturing and other production industries. Monthly data showed output rising 0.4% in June, suggesting momentum heading into the third quarter despite the drag from softer hiring and continuing uncertainty over U.S. trade policy. Finance Minister Rachel Reeves said the figures offered “positive” evidence that the recovery is broadening, while analysts noted that the stronger-than-expected headline lifted sterling and tempered market bets on near-term Bank of England rate cuts. Policymakers will now weigh the surprise resilience in activity against still-elevated inflation as they set policy for the rest of the year.