Businesses send warning over UK economy and further job cuts
Business groups have warned that the UK’s surprise GDP numbers should not be overly celebrated and that more needs to be done to promote growth, or further job losses and business closures are coming.
The UK’s GDP grew 0.3% in Quarter 2 2025 (April to June), surprising to the upside. Data published by the Office for National Statistics on Thursday (14 August) shows that the Services (+0.4%) and Construction (+1.2%) sectors both grew, but Production (-0.3%) fell.
The total underlying trade deficit widened to £1.7 billion to a deficit of £9.2 billion in Quarter 2 (April to June) 2025 because of a larger rise in imports than exports.
Responding to the data, the Confederation of British Industry noted that a modest rebound in June brought Q2 to a positive close — but today’s figures confirm that the strong growth seen earlier this year was a one-off and underlying conditions remain fragile.
“With business costs mounting, the labour market cooling, investment intentions weakening, and confidence generally subdued, the UK is walking a narrow path between resilience and stagnation.
“Policy uncertainty in the run-up to the Autumn Budget risks tipping the balance. With the business tax burden already at a 25-year high, the government must chart a steadier course by ruling out further tax rises and prioritising policies that can quickly lift investment and productivity.”
This was largely echoed by the British Chamber of Commerce, which warned that the growth risks masking underlying business pain.
“Without thriving firms, the economy will continue to struggle. We saw better than expected growth at the start of the year, largely because of stockpiling ahead of US tariffs,” it said.
“However, tax burdens at home, alongside uncertain global trading conditions, created a very challenging environment for the UK’s SMEs in Q2. The impact of April’s national insurance hike is now clear, with our latest survey showing investment and recruitment hit.”
It added that long-term strategic plans from the government on industry, infrastructure and trade have been widely welcomed by businesses. But with the focus now on delivery, persistent cost pressures mean firms are left with one hand tied behind their back.
“There must be no more business taxes in the Autumn budget. Our recently published Blueprint for Growth document offers the government practical ways forward to help businesses invest, recruit, and trade,” it said.
