UK financial system defies gloomy warnings to develop 0.7% in first quarter of 12 months | Financial development (GDP)

The UK financial system grew by 0.7% within the first three months of the 12 months, in line with 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 mentioned gross home product (GDP) rose on the strongest tempo in a 12 months over the primary quarter, persevering with an enlargement after development of 0.1% within the remaining 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 12 months that her tax insurance policies would hit jobs and development.

Nevertheless, economists have cautioned that development later within the 12 months is prone to be a lot weaker than within the first quarter, amid considerations over the fallout from Trump’s erratic tariff plans after his “liberation day” announcement on 2 April.

The Financial institution of England final week mentioned Britain’s prospects for development 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 12 months.

Keir Starmer’s authorities has sought to insulate Britain from the worldwide fallout by placing 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 automobiles, aluminium and metal.

The UK prime minister additionally agreed a long-desired commerce cope with 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 development within the first quarter, after an unexpectedly sturdy 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 development on the month.

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