The UK economy grew by 0.7% in the first quarter of 2025, according to the Office for National Statistics (ONS) – outperforming City forecasts of 0.6% and marking the most substantial quarterly growth in a year.

This early-year momentum was led by the UK’s dominant services sector, with notable contributions from retail, wholesale, computer programming, car leasing and advertising. The production sector, including manufacturing and energy, also saw a 1.1% rise. Construction, however, remained flat.

The ONS reported a 0.2% gross domestic product (GDP) increase in March alone, rounding off a stronger-than-expected quarter following February’s robust 0.5% expansion.

Economists had anticipated a positive quarter but warned that some growth may have been front-loaded as businesses rushed to invest ahead of Donald Trump’s new US tariffs announced on 2 April. UK export volumes rose by 3.5%, helping international trade contribute 0.4 percentage points to GDP.

While the government has been quick to claim success, economists remain cautious. The Bank of England expects growth to stall over the rest of the year due to global trade tensions and weaker business confidence.

To mitigate the impact, the government has struck a limited tariff accord with Washington, agreed to a long-awaited trade deal with India, and is seeking closer ties with the EU.

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