The United Kingdom has emerged as the fastest-growing economy among the G7 nations, after official data showed a stronger-than-expected economic expansion in the first quarter of 2025. According to the Office for National Statistics (ONS), the UK’s gross domestic product (GDP) rose by 0.7% from the previous quarter — its fastest pace in a year.
The growth was driven largely by the country’s dominant services sector and slightly exceeded market forecasts of a 0.6% rise. It also marked the strongest performance since the first quarter of 2024, when the economy grew by 0.9%, according to news agency AP.
The better-than-expected figures provide a boost to the Labour government, which has prioritized economic growth since coming to power in July 2024. While the first-quarter momentum is notable, economists warn that it may not last.
Several analysts believe the economy is likely to cool in the second quarter, due to rising global trade tensions and new domestic fiscal pressures. The ongoing uncertainty linked to US President Donald Trump's trade policies, particularly the 10% baseline tariff on UK goods entering the US, has contributed to cautious outlooks. While a 90-day tariff pause offered some relief, the broader impact of the US-China trade dispute continues to cloud global economic conditions.
In a development that slightly eased some trade concerns, both Trump and British Prime Minister Keir Starmer announced progress on a bilateral trade agreement. Although the 10% baseline tariff remains, the US agreed to reduce duties on British exports such as autos, steel, and aluminum.
Still, economists point to several headwinds facing the UK economy in the months ahead. New taxes on businesses introduced in April, along with increases in energy and water bills, are expected to weigh on both business activity and consumer spending.
Deutsche Bank’s chief UK economist, Sanjay Raja, noted that while the first quarter brought a welcome uptick, slower growth is likely in the near term amid weakening global demand and tariff-related trade disruptions.
Despite the uncertain outlook, the UK’s strong start to 2025 places it ahead of its G7 peers in terms of quarterly growth — a notable turnaround after a sluggish performance in the second half of 2024.
The growth was driven largely by the country’s dominant services sector and slightly exceeded market forecasts of a 0.6% rise. It also marked the strongest performance since the first quarter of 2024, when the economy grew by 0.9%, according to news agency AP.
The better-than-expected figures provide a boost to the Labour government, which has prioritized economic growth since coming to power in July 2024. While the first-quarter momentum is notable, economists warn that it may not last.
Several analysts believe the economy is likely to cool in the second quarter, due to rising global trade tensions and new domestic fiscal pressures. The ongoing uncertainty linked to US President Donald Trump's trade policies, particularly the 10% baseline tariff on UK goods entering the US, has contributed to cautious outlooks. While a 90-day tariff pause offered some relief, the broader impact of the US-China trade dispute continues to cloud global economic conditions.
In a development that slightly eased some trade concerns, both Trump and British Prime Minister Keir Starmer announced progress on a bilateral trade agreement. Although the 10% baseline tariff remains, the US agreed to reduce duties on British exports such as autos, steel, and aluminum.
Still, economists point to several headwinds facing the UK economy in the months ahead. New taxes on businesses introduced in April, along with increases in energy and water bills, are expected to weigh on both business activity and consumer spending.
Deutsche Bank’s chief UK economist, Sanjay Raja, noted that while the first quarter brought a welcome uptick, slower growth is likely in the near term amid weakening global demand and tariff-related trade disruptions.
Despite the uncertain outlook, the UK’s strong start to 2025 places it ahead of its G7 peers in terms of quarterly growth — a notable turnaround after a sluggish performance in the second half of 2024.
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