London Daily

Focus on the big picture.
Thursday, Oct 23, 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
US Administration Under President Donald Trump Reportedly Lifts Ban on Ukraine’s Use of Storm Shadow Missiles Against Russia
‘Frightening’ First Night in Prison for Sarkozy: Inmates Riot and Shout ‘Little Nicolas’
White House Announces No Imminent Summit Between Trump and Putin
US and Qatar Warn EU of Trade and Energy Risks from Tough Climate Regulation
Apple Challenges EU Digital Markets Act Crackdown in Landmark Court Battle
Nicolas Sarkozy begins five-year prison term at La Santé in Paris
Japan stocks surge to record as Sanae Takaichi becomes Prime Minister
This Is How the 'Heist of the Century' Was Carried Out at the Louvre in Seven Minutes: France Humiliated as Crown with 2,000 Diamonds Vanishes
China Warns UK of ‘Consequences’ After Delay to London Embassy Approval
France’s Wealthy Shift Billions to Luxembourg and Switzerland Amid Tax and Political Turmoil
"Sniper Position": Observation Post Targeting 'Air Force One' Found Before Trump’s Arrival in Florida
Shouting Match at the White House: 'Trump Cursed, Threw Maps, and Told Zelensky – "Putin Will Destroy You"'
Windows’ Own ‘Siri’ Has Arrived: You Can Now Talk to Your Computer
Thailand and Singapore Investigate Cambodian-Based Prince Group as U.S. and U.K. Sanctions Unfold
‘No Kings’ Protests Inflate Numbers — But History Shows Nations Collapse Without Strong Executive Power
Chinese Tech Giants Halt Stablecoin Launches After Beijing’s Regulatory Intervention
Manhattan Jury Holds BNP Paribas Liable for Enabling Sudanese Government Abuses
Trump Orders Immediate Release of Former Congressman George Santos After Commuting Prison Sentence
S&P Downgrades France’s Credit Rating, Citing Soaring Debt and Political Instability
Ofcom Rules BBC’s Gaza Documentary ‘Materially Misleading’ Over Narrator’s Hamas Ties
Diane Keaton’s Cause of Death Revealed as Pneumonia, Family Confirms
Former Lostprophets Frontman Ian Watkins Stabbed to Death in British Prison
"The Tsunami Is Coming, and It’s Massive": The World’s Richest Man Unveils a New AI Vision
Outsider, Heroine, Trailblazer: Diane Keaton Was Always a Little Strange — and Forever One of a Kind
Dramatic Development in the Death of 'Mango' Founder: Billionaire's Son Suspected of Murder
Two Years of Darkness: The Harrowing Testimonies of Israeli Hostages Emerging From Gaza Captivity
EU Moves to Use Frozen Russian Assets to Buy U.S. Weapons for Ukraine
Europe Emerges as the Biggest Casualty in U.S.-China Rare Earth Rivalry
HSBC Confronts Strategic Crossroads as NAB Seeks Only Retail Arm in Australia Exit
U.S. Chamber Sues Trump Over $100,000 H-1B Visa Fee
Shenzhen Expo Spotlights China’s Quantum Step in Semiconductor Self-Reliance
China Accelerates to the Forefront in Global Nuclear Fusion Race
Yachts, Private Jets, and a Picasso Painting: Exposed as 'One of the Largest Frauds in History'
Australia’s Wedgetail Spies Aid NATO Response as Russian MiGs Breach Estonian Airspace
McGowan Urges Chalmers to Cut Spending Over Tax Hike to Close $20 Billion Budget Gap
Victoria Orders Review of Transgender Prison Placement Amid Safety Concerns for Female Inmates
U.S. Treasury Mobilises New $20 Billion Debt Facility to Stabilise Argentina
French Business Leaders Decry Budget as Macron’s Pro-Enterprise Promise Undermined
Trump Claims Modi Pledged India Would End Russian Oil Imports Amid U.S. Tariff Pressure
Surging AI Startup Valuations Fuel Bubble Concerns Among Top Investors
Australian Punter Archie Wilson Tears Up During Nebraska Press Conference, Sparking Conversation on Male Vulnerability
Australia Confirms U.S. Access to Upgraded Submarine Shipyard Under AUKUS Deal
“Firepower” Promised for Ukraine as NATO Ministers Meet — But U.S. Tomahawks Remain Undecided
Brands Confront New Dilemma as Extremists Adopt Fashion Labels
The Sydney Sweeney and Jeans Storm: “The Outcome Surpassed Our Wildest Dreams”
Erika Kirk Delivers Moving Tribute at White House as Trump Awards Charlie Presidential Medal of Freedom
British Food Influencer ‘Big John’ Detained in Australia After Visa Dispute
ScamBodia: The Chinese Fraud Empire Shielded by Cambodia’s Ruling Elite
French PM Suspends Macron’s Pension Reform Until After 2027 in Bid to Stabilize Government
Orange, Bouygues and Free Make €17 Billion Bid for Drahi’s Altice France Telecom Assets
×