The Office for National Statistics (ONS) announced on Tuesday 30th September 2025 that the UK economy grew by only 0.3% in the second quarter of the year. Ask most laypeople what they think of that and they’ll likely tell you they couldn’t care less, they don’t know what it all means, or that growth is growth and that’s got to be a good thing… right?
Now that the dust has settled on the ONS figures and our business experts have had a moment to gather their thoughts about the new stats, we thought we would take a look at why GDP only grew by 0.3%, how it compares to Q1 of 2025, and what it all means for your business. As an SME owner, understanding the impact of the wider economy on your individual business is vital. We’ll help break that down for you today.
What Does Economic/GDP Growth Mean?
A country’s GDP (or Gross Domestic Product) is essentially the value of every good and service that the country produces. By measuring it’s overall value, you get a good idea about the overall economic health of the country during a snapshot in time. Generally, GDP figures are released by the ONS for each quarter of the year:
- Q1: 1st January to March 31st
- Q2: 1st April to June 30th
- Q3: 1st July to September 30th
- Q4: 1st October to December 31st
By monitoring the value of the goods and services produced, you get an idea about whether the country is growing or shrinking. A growing economy means higher wages, more jobs, increased investment, and greater government revenue from taxes. In short, a growing economy is good news for business owners.
Is 0.3% GDP Growth Good?
All growth is good. A growing economy is one in which your business can operate with more confidence. Still, some experts were predicting more growth for Q2 of 2025, and in comparison to last quarter (more on this later), the numbers aren’t exactly earth-shattering.
Here’s a detailed look at the past five or so years (GDP growth from Q1 of 2020 to Q2 of 2025:
| 2020 Q1 | -2.7 |
|---|---|
| 2020 Q2 | -20.3 |
| 2020 Q3 | 16.8 |
| 2020 Q4 | 1.4 |
| 2021 Q1 | -1.0 |
| 2021 Q2 | 7.3 |
| 2021 Q3 | 1.7 |
| 2021 Q4 | 1.5 |
| 2022 Q1 | 0.7 |
| 2022 Q2 | 0.3 |
| 2022 Q3 | 0.1 |
| 2022 Q4 | 0.3 |
| 2023 Q1 | 0.1 |
| 2023 Q2 | 0 |
| 2023 Q3 | -0.1 |
| 2023 Q4 | -0.2 |
| 2024 Q1 | 0.9 |
| 2024 Q2 | 0.5 |
| 2024 Q3 | 0 |
| 2024 Q4 | 0.1 |
| 2025 Q1 | 0.7 |
| 2025 Q2 | 0.3 |
Figures above are taken from the ONS website monitoring quarterly growth year on year.
Ignoring the COVID-19 outlier (impacting Q2 and Q3 of 2020 – where we saw the biggest ever drop in GDP since records began followed by the biggest ever climb between quarters due to the essential shutting down of the economy for the pandemic and reopening again following lockdown), our business experts calculated the average GDP growth for the time period and it sits at 0.6%.
So the 0.3% growth reported for Q2 of 2025 is lower than average. But what could be affecting the figures and why does economy growth seem to have cooled off slightly compared to the first quarter?
Why Do The Figures For Q1 And Q2 Look So Different?
A growth of 0.7% in Q1 of 2025 was impressive and perhaps above what was expected, and now economic experts are starting to unpick why growth may have been so strong in Q1 compared to Q2.
It’s thought that perhaps the growth figures in Q1 are skewed somewhat by a rush on house purchases that occurred at the start of the year for fears of the rising stamp duty impacting overall costs for would-be buyers. That would explain a slight dip in figures now, since many of the people who may have made a purchase in Q2 decided to jump in early in Q1.
The strength of a country’s GDP growth is only really revealed at the end of the year, however, because good economic growth is seen as around 2-3% per year. So far in the first half of 2025 growth is at 1%, so a strong performance for the year is still very much possible depending on Q3 and Q4 figures.
What Do The New Q2 Figures Mean For UK Business?
A growing economy, no matter by how much, is only a positive thing for UK business owners as customers have more money to spend than they did previously and investors are more willing to take a chance on new or emerging businesses or products/services, so you could be in a good position to launch something new.
Smaller growth than anticipated isn’t necessarily the red flag some commentators and analysts might have you believe (especially those of opposing political persuasions to the current UK government), but that’s not to say business owners can sit back and relax. Q3 figures might show a slight decline in growth, but that remains to be seen. For now, you should consider whether a new product launch or business venture is right for you, and if it’s the right time.
The state of the economy can either be a strong headwind slowing your business ship, or a welcome gust filling its sails. Right now, with 0.3% GDP growth, it’s more of a gentle breeze.
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