Second-quarter GDP growth of 0.4% defies forecasts, but geopolitical tensions threaten the economic rebound.
The U.K. economy expanded by 0.4% in the second quarter, following a 0.6% rise in the first, surpassing economist expectations. Business investment also grew by 1.7%, reversing predictions of a 0.5% decline, and pushing annualized growth to 2% in the first half of the year.
The performance marks the strongest growth among G7 nations for a second consecutive quarter. However, economists warn of a potential slowdown due to rising energy costs and persistent inflation pressures, which could erode household spending power.
Geopolitical risks, particularly the U.S.-Israel conflict with Iran, pose a significant threat. The IMF previously cautioned that the U.K. faces the sharpest growth hit among advanced economies from prolonged tensions, given its reliance on energy imports.