The UK economy defied expectations in the first quarter by expanding at its fastest pace in a year.
Figures from the Office for National Statistics showed UK GDP grew by 0.7% in the first three months of 2025, following growth of 0.1% in the previous quarter.
The strong growth comes despite warnings of a collapse in confidence following US trade tariffs, beating market expectations of a 0.6% rise.
The ONS said growth was largely driven by a dominant services sector, which rose by 0.7% in the first quarter, and a 1.1% increase in production.
The data showed monthly GDP grew 0.2% in March, boosted by services and construction, following an increase of 0.5% in February and no growth in January.
Danni Hewson, head of financial analysis at AJ Bell, said: “There’s no question that the economy looks a whole lot more robust than many people had expected considering the gloom that permeated perception in the wake of last year’s Budget.
“Growth has been resilient and significant despite concerns about the impact of increased employment costs and uncertainty linked to Donald Trump’s tariffs. Whilst not quite matching last year’s first quarter, it has come in way above what had been expected.”
However, industry commentators have cautioned that growth going forward may be less robust, amid concerns around the ramifications of Trump’s trade policy, coupled with a cooling in the labour market.
Hewson said: “There will have been plenty of manufacturers seeking to get ahead of Donald Trump’s tariffs by front loading production and exports, and even with a trade deal between the US and UK there is still a huge amount of uncertainty about what trade will look like over the rest of the year.
“But the sun has been shining and looking at the latest BRC retail data it seems even Awful April’s increases in multiple bill payments hasn’t dented consumer spend or consumer confidence. Falling interest rates are expected to boost the housing market and Labour’s big push to get Britain building also bodes well for growth in the construction sector.
“However, there is a real sense that whilst these figures should be celebrated, they are unlikely to be repeated over the coming quarters,” she added.
The sentiment was shared by Lindsay James, investment strategist at Quilter.
James said: “This robust performance will offer reassurance to policymakers. While the data doesn’t radically shift the economic picture, it does suggest that the UK is on slightly firmer footing than previously feared.
“However, challenges remain. Clearly some sources of strength could be put down to factors such as the change of the Stamp Duty Land Tax threshold, which brought forward purchases. Early signs of cooling in the labour market may cap consumer demand going forward. That, combined with sticky core inflation and external pressures, means the Bank of England will still tread cautiously.
“The stronger GDP data is welcome news, but the bigger question is whether it represents the start of a more durable recovery or simply a temporary rebound. For now, the UK economy is outperforming modest expectations but the road to sustained growth remains uncertain.”
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