LONDON: Britain’s economy grew more strongly than expected in the first three months of 2025, giving a boost to finance minister Rachel Reeves, but she faces a stiffer test ahead due to her tax hike on businesses and US trade wars.
Between January and March, gross domestic product grew by 0.7%, accelerating sharply from an increase of 0.1% in the last three months of 2024, said the Office for National Statistics.
That was above the 0.6% growth forecast in a Reuters poll of economists and which was also expected by the Bank of England (BoE). In March, the economy grew unexpectedly, expanding by 0.2% from February.
The Reuters poll had pointed to a flat reading of 0.0%.
Sterling edged up against the US dollar after the data was announced.
“The growth figures showed the strength and potential of the UK economy,” Reeves said in a statement.
“In the first three months of the year, the UK economy has grown faster than the United States, Canada, France, Italy and Germany.”
She and Prime Minister Keir Starmer are trying to kick-start Britain’s sluggish economy via increased spending on infrastructure and other reforms that they hope will boost investment.
However, the BoE said last week it expected the growth jump in the January-to-March period to be temporary with output likely to expand by 1% this year, speeding up only slightly to 1.5% growth in 2027.
Trump’s tariffs are expected to slow the global economy while British businesses have said they would be hit by big rises in employment taxes ordered by Reeves and in the minimum wage, which both came into effect in April.
Suren Thiru, economics director at ICAEW, an accountancy body, said the first-quarter growth spurt was likely to be temporary with some businesses rushing to meet orders before the US tariffs took effect.
“This robust quarterly reading is probably the pinnacle for economic growth this year, with activity likely to slow sharply going forward as tax and tariff rises and global uncertainty bite,” Thiru said. — Reuters
