Enjoy the moment UK: Economists warn against expecting lasting robust growth
On May 9, 2025, the Ye Grapes pub in Shepherd Market, Mayfair, London, is buzzing with activity.
Mike Kemp | In Pictures | Getty Images
The U.K.’s recent economic performance, which surpassed expectations, will be welcomed by the leadership in Downing Street. However, economists caution to savor this positivity while it lasts, as growth is anticipated to slow later this year.
Economist insights suggest:
“It’s encouraging to see the U.K. economy starting 2025 with solid growth. Yet, post-pandemic trends show strong beginnings followed by declines. Growth is likely to decrease later this year. Even with a UK-US trade agreement leading to tariff reductions, the U.K.’s open economy will face challenges from a global slowdown, affecting public finances.” — George Brown, senior economist at Schroders
Furthermore, the uptick in GDP appears to stem from temporary tariff and tax impacts, rather than an indication of sustainable growth.
“The remarkable 0.7% quarterly increase in GDP during Q1 is unlikely to recur, as much of it resulted from preemptive activity ahead of U.S. tariffs and rising local business taxes. This may represent the peak for the year.” — Paul Dales, chief U.K. economist at Capital Economics
— Holly Ellyatt
UK GDP figures provide relief to Chancellor Rachel Reeves
British Prime Minister Keir Starmer (L) and Chancellor Rachel Reeves (R) share tea during a visit to local businesses on September 26, 2021.
Justin Tallis | Afp | Getty Images
The U.K.’s unexpected economic growth of 0.7% in the first quarter is a welcome change for Chancellor Rachel Reeves, especially compared to the previous quarter’s minimal 0.1% gain.
“Today’s growth figures highlight the strength and potential of the UK economy,” she remarked in an email. “In the first quarter, we outpaced growth in the U.S., Canada, France, Italy, and Germany,” she added.
Under pressure to stimulate growth post a period of stagnation, Reeves is capitalizing on this positive data, stating:
“Amid global uncertainties, we’re making choices for the national interest. Since the election, we’ve implemented four interest rate cuts, established two trade agreements, saved British Steel, and raised the minimum wage for millions.” — Holly Ellyatt
UK economy grows 0.7% in first quarter, but the surge may be short-lived
The U.K. economy experienced a 0.7% growth in the first quarter of 2025, according to a preliminary estimate from the Office for National Statistics.
Economists anticipated a 0.6% growth, an improvement from the lackluster performances of 0.1% and zero growth in the preceding quarters.
Growth was primarily attributed to a 0.7% increase in the services sector, along with a 1.1% rise in production, while construction remained stagnant.
Deutsche Bank Economist Sanjay Raja remarked that the initial quarter’s rise may not be sustainable.
“The upbeat end to 2024 combined with robust domestic spending likely spurred this growth, but we expect a decrease in GDP growth in the second quarter, ultimately returning to a trend growth rate by early 2026.” — Holly Ellyatt
