UK economy sees stronger-than-expected growth at the start of 2025

New data published by the Office for National Statistics (ONS) shows the UK economy grew more than expected in the first three months of 2025.

The economy grew by 0.7% in the period between January-March 2025, 0.01 percentage points higher than analyst estimates. The ONS attributed the higher-than-expected growth to the services industry, while the production sector also grew significantly. The economy grew by 0.2% in March, which was also better than the zero growth that had been forecast.

“Today’s growth figures show the strength and potential of the UK economy,” said Chancellor Rachel Reeves in an accompanying statement.

“Against a backdrop of global uncertainty, we are making the right choices in the national interest. But there is more to do, we will go further and faster to make working people better off,” she said.

Despite the positive growth numbers, there is uncertainty about the UK’s growth prospects for the rest of the year, primarily due to ongoing international trade concerns. Notably, the January-March period does not include US President Donald Trump’s ‘Liberation Day’ tariffs, which have thrown the global market into uncertainty.

“Changes in global trade tariffs mean the outlook for inflation is particularly uncertain at the moment,” the Bank of England (BoE) said in a presentation at the start of May.

“How much and in what direction tariffs impact the prices of UK goods, and therefore inflation, will depend on what policies are decided, and how countries, businesses and consumers will respond. We will monitor this closely.”

On the one hand, increases in global trade tariffs could mean that inflation is lower than expected if it means some countries lower the prices of the goods they sell to the UK, the BoE said.

“On the other hand, inflation could also be higher than expected, for example, if companies have to change where and how they supply goods, and their costs go up in the process.”