Business News Round Up (14/08/2025)
UK economic growth slows to 0.3% in second quarter
The UK economy expanded 0.3% in the second quarter, surpassing expectations but underlining the challenges facing chancellor Rachel Reeves as she attempts to boost growth and repair the public finances. Thursday’s GDP figure for the April-to-June period was above the 0.1% forecast by economists but marked a sharp slowdown from the 0.7% growth in the first three months of the year. The services, construction and manufacturing sectors underpinned growth in the second quarter, according to the Office for National Statistics, with the economy expanding by a faster than expected 0.4% in June following declines in April and May. Businesses are contending with the higher taxes announced in Reeves’ first October Budget and the uncertainty unleashed by Donald Trump’s trade war. Reeves is now gearing up for an Autumn Budget that economists say will require further tax increases to fill a fiscal hole that some estimate may exceed £20bn.
https://www.ft.com/content/4cc19d3c-9ae1-4671-aefd-84355f1950ec
GERS reaction: a deterioration of the net fiscal balance mostly driven by higher devolved expenditure
The estimates of Scotland’s net fiscal balance are out for 2024-25. There was deterioration of the fiscal balance, which is unsurprising given that the UK’s fiscal balance worsened during that year as well. Scotland’s estimated net fiscal balance was estimated to have been -£26 billion, or -12% of GDP, when including a geographical share of North Sea revenues and economic activity. The worsening of the fiscal balance in 2024-25 is larger for the figure including the North Sea, in large part because oil and gas tax receipts have fallen – by £0.8 billion, or 0.4% of Scotland’s GDP. Scotland’s net fiscal balance is 1.9% of GDP worse in 2024-25 than it was in 2023-24, but it is worth looking at what is driving this. We have already seen that North Sea revenues have added 0.4% of GDP to the deficit; reserved expenditure also adds 0.2% of GDP to that figure.
North West makes slow start to Q3, but firms increasingly optimistic about outlook
The level of business activity dipped slightly across the North West private sector at the start of the third quarter, according to the latest NatWest Growth Tracker, but firms reported increased optimism about conditions over the next 12 months. The headline North West Business Activity Index – which measures changes in the region’s output of goods and services – registered 49.4 in July, coming in just below the 50.0 threshold that distinguishes growth from contraction. Surveyed firms, especially those in the manufacturing sector, reported a general lack of demand and pressures from rising prices. More positively, however, latest data showed a rebound in business expectations towards growth prospects in the forthcoming year. The degree of optimism was the joint-highest in the past nine months, reflecting hopes of a recovery in market conditions, plans for increased marketing activity and new products, and a brighter outlook for export sales.
Savills says market slowdown will be temporary
Savills said it traded broadly in line with expectations and ahead of the comparable period last year, against the backdrop of uncertainty, particularly in EMEA and Asia Pacific in Q2. In the six months to 30 June, the property agency delivered revenue of £1.13 billion, an increase of 6% (8% in constant currency) over the comparable period (H1 2024: £1.06bn). Underlying profit was £23.3m, 10% higher than the prior period (H1 2024: £21.2m) (9% in constant currency). The group’s underlying profit margin was 2.1% (H1 2024: 2.0%). Reported profit before tax increased by 78% to £15.8m (H1 2024: £8.9m), reflecting the growth in underlying profit and a reduction in exceptional transaction-related costs.