- UK GDP grew by 0.7% in the first three months of 2025
- Service sector a driving force for growth in Q1
- Household expenditure was up 0.2%, with people prepared to get out and spend
- Business investment was up 5.9% despite increased labour costs from April
- February delivered the biggest boost, but growth hung around in March as GDP for the month surprised with a 0.2% rise
Danni Hewson, AJ Bell head of financial analysis, comments on the latest UK GDP figures:
“There’s no question that the economy looks a whole lot more robust than many people had expected considering the gloom that permeated perception in the wake of last year’s Budget.
“Growth has been resilient and significant despite concerns about the impact of increased employment costs and uncertainty linked to Donald Trump’s tariffs. Whilst not quite matching last year’s first quarter, it has come in way above what had been expected.
“The service sector has been the driving force. People have been prepared to get out and spend money after a leaner Christmas as inflation continued to cool and wage increases meant many had a bit more in their pockets.
“That confidence is evident in March’s continued growth, with big ticket items back on the menu including a six-year high for sales of vehicles. But the real prize for the chancellor will be the increase in business investment despite concerns about labour costs which increased in April.
“Of course, these figures are backwards-looking and the real impact of those changes won’t be clear for months to come. Indeed, the latest UK jobs data hints that fissures have already formed.
“There will have been plenty of manufacturers seeking to get ahead of Donald Trump’s tariffs by front loading production and exports, and even with a trade deal between the US and UK there is still a huge amount of uncertainty about what trade will look like over the rest of the year.
“But the sun has been shining and looking at the latest BRC retail data it seems even Awful April’s increases in multiple bill payments hasn’t dented consumer spend or consumer confidence. Falling interest rates are expected to boost the housing market and Labour’s big push to get Britain building also bodes well for growth in the construction sector.
“However, there is a real sense that whilst these figures should be celebrated, they are unlikely to be repeated over the coming quarters.”
