The United Kingdom recorded its fastest economic growth in over a year during the first quarter of 2025, boosted by a surge in home buying ahead of a property tax deadline and increased manufacturing activity in anticipation of new United States tariffs, Reuters reported.
According to the Office for National Statistics, the economy expanded by 0.7 percent between January and March, the strongest quarterly growth since early 2024.
“UK gross domestic product is estimated to have grown by 0.7% in Quarter 1 (Jan to Mar) 2025, unrevised from the first estimate,” it said on X on Monday.
The figure confirms earlier estimates and marks a sharp contrast to the 0.1 percent growth seen in the final quarter of last year.
Reuters reported that ONS also revised March’s growth upward to 0.4 percent, from an initial 0.2 percent. However, the economic boost may prove short-lived. Preliminary data already shows a 0.3 percent contraction in April, partly due to one-off disruptions.
The Bank of England projects a more modest 0.25 percent growth for the second quarter. Finance Minister Rachel Reeves is hoping the uptick will continue, easing pressure to introduce further tax hikes as the government works to meet its fiscal goals.
The strong first quarter was driven in part by a rush of property transactions before the March 31 expiration of a homebuyer tax break. Household spending rose by 0.4 percent, revised up from 0.2 percent, fueled by expenditures on housing, household goods, services, and transport. To finance this spending, households dipped into their savings, though the savings ratio remains robust at 10.9 percent .
Manufacturers also ramped up output early in the year, anticipating new import tariffs planned by US President Donald Trump. Some of these proposed tariffs have since been suspended, easing business uncertainty.
Chief economist at RSM UK, Thomas Pugh, noted that earlier weakness in consumer spending and hiring was likely a temporary response to tax changes and trade uncertainty.
“Now that uncertainty has started to recede, consumer confidence is rebounding, and business surveys suggest the worst of the labour market pain is behind us,” he said.
A recent survey indicates that employer confidence in the UK has reached a nine-year high, with optimism growing about the economic outlook. The Bank of England is expected to cut interest rates twice more this year, potentially bolstering consumer spending.