UK economy grew by 0.4% in June on stronger services and construction output – business live | Business

National Grid has agreed a £1.7bn deal to sell its Grain LNG business to British Gas owner Centric and US private equity group Bridgepoint.

Grain LNG owns and operates the UK’s largest LNG import terminal, at the Isle of Grain in Essex, under long-term take or pay contracts. National Grid has been looking for the last year to get rid of businesses that are not its main focus on electricity networks.

Grain has been one of the key parts of the UK’s energy system ever since the UK opted to increase its consumption of gas for power generation. It previously took in large quantities of gas from Russia before the full-scale invasion of Ukraine, although that focus has shifted to the Qatar, Australia and particularly to the US thanks to its shale gas boom making it a major energy exporter.

John Pettigrewchief executive of National Gridsaid:

Today’s announcement of the sale of Grain LNG marks another successful step in delivering National Grid’s previously communicated strategy to streamline our business and focus on networks, and follows the completion of the sale of our NG Renewables business in May 2025.

Centrica’s share price rose 1.3% on Thursday. It said it had injected £200m in equity, with the bulk of the purchase funded by debt.

Chris O’Sheagroup chief executive of Centric, said:

The Isle of Grain terminal is a strategic asset that will support the UK’s energy security for many decades to come, keeping energy flowing reliably and affordably to households and businesses across the country as we transition to net zero. That’s why we are so pleased to be investing, continuing Centrica’s pivot towards long-term, predictable infrastructure cash flows, underpinning our medium-term guidance and creating valuable future options.

O’Shea also threw the UK government a bone, saying: “Our decision to commit £3bn of capital in both Sizewell C and the Isle of Grain demonstrates the attractiveness of the UK as an investment location underpinned by supportive government investment policies.”

Stronger-than-expected GDP figures have not helped the FTSE 100 very much this morning: London’s main stock market index dropped 0.3% in the first few minutes of trading on Thursday.

That is bucking the trend across most of Europe’s big companies. Here are the opening snaps for European indicesvia Reuters:

• EUROPE’S STOXX 600 UP 0.09%

• GERMANY’S DAX UP 0.08%

• FRANCE’S CAC 40 UP 0.19%

• SPAIN’S IBEX UP 0.33%

• Euro Stoxx Index Up 0.18%; Euro Zone Blue Chips Up 0.22%

The positive surprise from stronger-than-expected UK GDP should not give the government too much comfort, according to the National Institute of Economic and Social Research (Niesr), a respected economic thinktank.

Donald Trump’s trade wars are still a major source of uncertainty – not least as the crucial US relationship with China is still undecided – while the tariffs he has definitely imposed will likely be a drag on global growth. In the UK, meanwhile, households and businesses are expecting tax increases at the upcoming budget in the autumn.

Fergus Jimenez-Englandan associate economist at Niesrsaid:

GDP growth was slightly higher than forecast, recording 0.4% in June owing to stronger-than-expected growth in services and construction. The economy therefore grew by 0.3% in the second quarter.

Despite this positive surprise, we expect growth to remain subdued in the third quarter of this year as uncertainty over fiscal policy and international trade continues to weigh on economic activity.

As outlined in our recent UK economic outlook, the chancellor must build a substantial fiscal buffer in the autumn budget to avoid uncertainty plaguing growth into next year.

Rachel Reevesthe chancellorhas welcomed the stronger-than-expected GDP growth figures.

However, it is not a resounding celebration, perhaps given all of the uncertainty in the global economy.

She said:

Today’s economic figures are positive with a strong start to the year and continued growth in the second quarter. But there is more to do to deliver an economy that works for working people.

I know that the British economy has the key ingredients for success but has felt stuck for too long.

That is why we’re investing to rebuild our national infrastructure, cutting back on red tape to get Britain building again and boosting the national minimum wage to make work pay. There’s more to do and today’s figures only fuel my ambition to deliver on our plan for change.

Good morning, and welcome to our live, rolling coverage of business, economics and financial markets.

The UK economy grew by 0.4% month-on-month in June according to new data that helped the second quarter to end with better-than-expected output.

British output rose by 0.3% in the second quarter of 2025, the Office for National Statistics said. That was higher than the 0.1% expected by economists polled by Reuters.

The faster-than-expected growth was down to better performance from the services and construction sectors, which grew at 0.4% and 1.2% respectively in the quarter – although production output (which includes manufacturing) fell.

Real GDP per head is estimated to have grown by 0.2% in the latest quarter and is up 0.7% compared with the same quarter a year ago.

Nevertheless, it was still a slowdown compared to the first quarter, when the UK economy grew by 0.7%. Economists expected slower growth because of Donald Trump’s trade war, which caused chaos in the second quarter after his “liberation day” announcement on 2 April.

It is also unclear whether the help from the construction sector can be sustained, given more recent purchasing managers’ index data for July showing a steep drop in UK housebuilding.

We’ll have all the reaction to the GDP figures this morning.

The agenda

• 10am BST: Eurozone GDP growth rate second estimate (second quarter; previous: 0.6% quarter-on-quarter; consensus: 0.1%)

• 10am BST: Eurozone industrial production (June; previous: 1.7% month-on-month; consensus: -1%)

• 1pm BST: US producer price inflation (July; previous: 0%; consensus: 0.2%)