The British economy grew at its fastest pace in a year during the first quarter of 2025, official figures showed Thursday, offering a boost to the Labour government, which has made lifting growth a top priority.
The Office for National Statistics said gross domestic product rose 0.7% in the first quarter from the final three months of 2024, driven largely by the country’s dominant services sector.
The increase made the U.K. the fastest-growing economy among the Group of Seven leading industrial nations.
Growth slightly beat market expectations of 0.6% and marked the largest quarterly gain since the first quarter of 2024, when GDP grew by 0.9%.
Treasury chief Rachel Reeves welcomed the figures, saying they show Labour’s economic strategy is starting to deliver.
“We’re set to be the fastest-growing economy in the G7 in the first three months of this year, and that’s incredibly welcome — but I know there is more to do,” she said during a visit to a Rolls-Royce factory in Derby, in northern England.
Most economists expect growth to slow in the second quarter, citing global uncertainty sparked by U.S. President Donald Trump’s tariff policies.
Although many of Trump’s tariffs were paused for 90 days following market turmoil — including a 10% baseline tariff on U.K. goods entering the U.S. — global economic conditions remain unstable, particularly if the U.S.–China trade dispute continues.
Some uncertainty eased Thursday after both Trump and British Prime Minister Keir Starmer outlined details of a new U.S.–U.K. trade deal. While Trump retained the 10% baseline tariff, he agreed to lower duties on British autos, steel and aluminum.
Sanjay Raja, chief U.K. economist at Deutsche Bank, said the first-quarter growth is unlikely to last, particularly as trade disruptions escalate.
“Exporters will likely see reduced demand from higher U.S. tariffs and weaker global demand,” he said.
Economists also warned that growth could falter in the second quarter due to new business taxes introduced in April and a wave of price increases, including higher domestic energy and water bills, which may dampen consumer spending.