The UK economy expanded by 0.7 per cent in the first quarter of 2025, outpacing all other G7 nations and exceeding economists’ expectations. The Office for National Statistics (ONS) reported the growth as the highest in a year, offering a boost to Chancellor Rachel Reeves, who hailed the figures as evidence that the government is making the “right choices” despite international instability. Reeves acknowledged, however, that “there is more to do”, particularly with global headwinds such as President Donald Trump’s new US tariffs weighing on future prospects.
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Prime Minister Sir Keir Starmer also celebrated the figures, emphasising his government’s commitment to driving sustainable growth and easing the cost-of-living crisis. “The UK now has the fastest growth in the G7,” he said, adding that interest rate cuts and rising real wages were signs of progress. Nonetheless, he acknowledged ongoing challenges, stating, “We will go further and faster to deliver for working people.”
The positive GDP data came with caveats. While the CBI called the rise a “pleasant surprise”, it warned the strength of Q1 growth may be temporary. Business investment remains cautious, especially in light of the recent increase in employers’ National Insurance contributions. Meanwhile, March’s monthly growth fell to 0.2 per cent from 0.5 per cent in February, with output from UK factories beginning to decline, tempering the broader optimism.
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Critics, including Shadow Chancellor Sir Mel Stride and members of the Growth Commission, expressed concern about the underlying state of the economy. They pointed to downgraded growth forecasts from both the OBR and IMF, and warned that real GDP per capita — a more accurate measure of living standards — remains weak. Analysts also flagged the government’s rising tax burden and regulation as factors potentially undermining long-term economic resilience, despite strong headline numbers.
