London Daily

Focus on the big picture.
Thursday, Oct 02, 2025

UK economy still below pre-pandemic size, underscoring challenge for Truss

UK economy still below pre-pandemic size, underscoring challenge for Truss

Britain's economy remained below its pre-pandemic peak, according to data published on Friday that left the country further adrift of other Group of Seven nations and underscored the challenge facing new Prime Minister Liz Truss.

The Office for National Statistics said economic output unexpectedly rose by 0.2% in April through June, revised up from a previous reading of a 0.1% contraction, meaning the British economy has not yet fallen into a recession.

But the ONS revised down its estimate for Britain's recovery from the COVID-19 pandemic, reflecting a bigger hit to the economy than first thought in 2020 when health lockdowns shut down businesses across the country.

It said gross domestic product in the second quarter remained 0.2% below where it was at the end of 2019, a cut to its previous estimate of 0.6%.

"Despite the better news on the performance of the economy in Q2, the overall picture is that the economy is in worse shape than we previously thought," Paul Dales, an economist at Capital Economics, said.

"And that's before the full drag from the surge in inflation and leap in borrowing costs have been felt."

UK suffers weakest recovery in G7 from COVID-19 pandemic


Separate data showed British house prices failed to rise in monthly terms for the first time since July 2021, a latest sign of the slowdown in the market caused by the cost-of-living squeeze and rising interest rates.

New British finance minister Kwasi Kwarteng last week published an economic plan that he said would spur growth by cutting taxes.

But investors responded by selling the pound and British government bonds.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the figures suggested that the damage inflicted to the economy's ability to grow by COVID-19 and Brexit was even larger than previously thought.

"These revisions will compel the Office for Budget Responsibility to revise down further its estimates for future potential GDP," he said.

The recent turmoil in British financial markets has put the country's large current account deficit into new focus.

Friday's data showed current account gap in the April-June period shrank to 33.8 billion pounds ($37.60 billion). Economists polled by Reuters had pointed to a deficit of roughly 44 billion pounds. ($1 = 0.8990 pounds)

The shortfall was smaller than a 43.9 billion deficit in the first quarter which was revised down from an earlier estimate in part due to energy companies, buoyed by surging prices, making more profit abroad than initially thought.

The January-March deficit remained the biggest on record, the ONS said.

Truss and Kwarteng were due to meet the head of Britain's independent fiscal watchdog on Friday as the government looks to reassure investors.

Newsletter

Related Articles

0:00
0:00
Close
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
FBI Removes Agents Who Kneeled at 2020 Protest, Citing Breach of Professional Conduct
Trump Alleges ‘Triple Sabotage’ at United Nations After Escalator and Teleprompter Failures
Shock in France: 5 Years in Prison for Former President Nicolas Sarkozy
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
BNP Paribas Abandons Ban on 'Controversial Weapons' Financing Amid Europe’s Defence Push
Typhoon Ragasa Leaves Trail of Destruction Across East Asia Before Making Landfall in China
The Personality Rights Challenge in India’s AI Era
Big Banks Rebuild in Hong Kong as Deal Volume Surges
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Arnault Denounces Proposed Wealth Tax as Threat to French Economy
Study Finds No Safe Level of Alcohol for Dementia Risk
Denmark Investigates Drone Incursion, Does Not Rule Out Russian Involvement
Lilly CEO Warns UK Is ‘Worst Country in Europe’ for Drug Prices, Pulls Back Investment
Nigel Farage Emerges as Central Force in British Politics with Reform UK Surge
Disney Reinstates ‘Jimmy Kimmel Live!’ after Six-Day Suspension over Charlie Kirk Comments
U.S. Prosecutors Move to Break Up Google’s Advertising Monopoly
Nvidia Pledges Up to $100 Billion Investment in OpenAI to Power Massive AI Data Center Build-Out
U.S. Signals ‘Large and Forceful’ Support for Argentina Amid Market Turmoil
Nvidia and Abu Dhabi’s TII Launch First AI-&-Robotics Lab in the Middle East
Vietnam Faces Up to $25 Billion Export Loss as U.S. Tariffs Bite
Europe Signals Stronger Support for Taiwan at Major Taipei Defence Show
Indonesia Court Upholds Military Law Amid Concerns Over Expanded Civilian Role
Larry Ellison, Michael Dell and Rupert Murdoch Join Trump-Backed Bid to Take Over TikTok
Trump and Musk Reunite Publicly for First Time Since Fallout at Kirk Memorial
Vietnam Closes 86 Million Untouched Bank Accounts Over Biometric ID Rules
×