UK (Parliament Politics Magazine) – The UK economy grew 0.7% in Q1, defying gloomy forecasts amid tax hikes and tariffs, though experts expect slower growth ahead.
As reported by The Guardian, official data shows the UK economy expanded 0.7% in Q1, overcoming warnings of falling business confidence before Labour’s tax rises and Trump’s broad tariffs.
ONS report on UK GDP growth in Q1
The Office for National Statistics revealed that GDP surged at its fastest rate in a year during the first quarter. This growth extends the 0.1% rise recorded in the final quarter 2024. Financial analysts had predicted a 0.6% increase.
Fueled by Britain’s leading services sector, the new figures boosted Chancellor Rachel Reeves after business chiefs warned that her tax policies might damage jobs and economic growth.
Economists warn of slower growth amid tariff fallout
Experts have cautioned that economic growth later this year is likely to be considerably slower than in the first quarter. Their concerns arise from the impact of Trump’s unpredictable tariff measures announced on April 2.
Despite earlier predictions of strong first-quarter growth, fueled by an unexpected 0.5% rise in February, recent figures reveal that GDP in March increased by only 0.2%. City economists had expected no growth during that month.
Last week, the Bank of England warned that Britain’s growth outlook had dimmed due to rising global uncertainty from the US president’s trade conflicts. It predicted minimal economic growth through the end of the year.
How is Keir Starmer’s government shielding the UK from global trade fallout?
Keir Starmer’s government has moved to safeguard Britain from worldwide trade tensions by negotiating key trade deals. This included focusing on its industrial strategy and reaching an agreement with Washington to ease some of Trump’s tariffs on cars, aluminium, and steel.
The British prime minister secured a long-awaited trade agreement with India. Next week, he will seek to strengthen trade relations with the EU at an upcoming summit aimed at “resetting” ties with Brussels after Brexit.
Rachel Reeves’s views on the latest UK GDP growth
The Chancellor Rachel Reeves described the latest GDP figures as proof of the UK economy’s “strength and potential.”
Responding to the 0.7% quarterly growth, she said the government is making the “right choices,” though there is “more to do.”
Ms Reeves stated,
“In the first three months of the year, the UK economy has grown faster than the US, Canada, France, Italy and Germany. Up against a backdrop of global uncertainty, we are making the right choices now in the national interest.”
She added,
“But I know there is more to do, and that is why I’m determined we go further and faster to make working people better off.”
What methods are used to measure GDP?
There are three ways to measure GDP, including:
Output approach: Measure the worth of goods and services produced across industries like construction, retail, and manufacturing.
Expenditure approach: Includes investments by firms alongside household and government consumption.
Income approach: combines total company profits, employee wages, and income generated from production.