UK financial system defies gloomy warnings to develop 0.7% in first quarter of yr | Financial progress (GDP)

The UK financial system grew by 0.7% within the first three months of the yr, based on official figures, defying enterprise warnings of a collapse in confidence forward of Labour’s tax will increase and Donald Trump’s sweeping tariffs.

The Workplace for Nationwide Statistics stated gross home product (GDP) rose on the strongest tempo in a yr over the primary quarter, persevering with an enlargement after progress of 0.1% within the closing three months of 2024. Metropolis economists had forecast an increase of 0.6%.

Pushed by a Britain’s dominant providers sector, the newest snapshot will bolster the chancellor, Rachel Reeves, after enterprise leaders had warned earlier this yr that her tax insurance policies would hit jobs and progress.

Nonetheless, economists have cautioned that progress later within the yr is prone to be a lot weaker than within the first quarter, amid issues over the fallout from Trump’s erratic tariff plans after his “liberation day” announcement on 2 April.

The Financial institution of England final week stated Britain’s prospects for progress had worsened amid the heightened international uncertainty over the US president’s commerce wars, because it forecast close to stagnant exercise for the remainder of the yr.

Keir Starmer’s authorities has sought to insulate Britain from the worldwide fallout by hanging commerce offers and focusing consideration on the federal government’s industrial technique, together with agreeing an accord with Washington to scale back a few of Trump’s tariffs on vehicles, aluminium and metal.

The UK prime minister additionally agreed a long-desired commerce take care of India, and can subsequent week push for nearer commerce ties with the EU at a summit designed to “reset” relations with Brussels after Brexit.

Whereas analysts had predicted bumper progress within the first quarter, after an unexpectedly robust 0.5% enlargement in February, the newest month-to-month figures confirmed that GDP in March rose by 0.2%. Metropolis economists had forecast zero progress on the month.

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