The UK’s gross domestic product (GDP) is estimated to have grown by 0.7% in Q1 2025, data published by the Office for National Statistics on Monday (30 June) shows.
This marks the biggest quarter of growth since 2014. In output terms, growth during the quarter was driven by an increase of 0.7% in the services sector, production also grew by 1.3%, and the construction sector grew by 0.3%.
In expenditure terms, growth in the latest quarter was driven by increases in gross fixed capital formation, net trade and household consumption. Nominal GDP is estimated to have increased by 1.5%, mainly driven by an increase in compensation of employees.
Real household disposable income (RHDI) per head is estimated to have decreased in the latest quarter by 1% from a revised 1.8% increase in the previous quarter. The household saving ratio is estimated to have decreased by 1.1 percentage points to 10.9% this quarter, driven by a fall in the non-pension savings contributions.
Notably, the country was on track for the highest growth among the G7 countries before a combination of US President Donald Trump’s tariffs and the introduction of new taxes by the Labour government took effect, Bloomberg reports.
The outlook has darkened since the start of April amid a sharp drop in employment, weak retail sales and plunging exports to the US. Chancellor Rachel Reeves’ £26 billion increase in a payroll tax kicked in at the start of April. At the same time, Trump unleashed a wave of global tariffs, knocking economic prospects, even though the UK struck a partial deal to lessen some of the impact on British exports.
Leave a Reply