Britain’s economic system expanded barely greater than anticipated within the first quarter, official knowledge confirmed Thursday, protecting the interval earlier than business tax hikes and U.S. President Donald Trump’s tariffs blitz took impact.
Gross home product (GDP) rose 0.7% within the January-to-March interval after solely rising barely within the remaining quarter of final yr, the Office for National Statistics (ONS) mentioned in a press release.
It beats economists’ expectations of a 0.6% enhance.
The knowledge comes as a lift for Prime Minister Keir Starmer and his Labour authorities, which struggled to kickstart stagnant progress since coming to energy in July.
U.Okay. Treasury chief Rachel Reeves welcomed the news, saying the figures “show the strength and potential of the U.K. economy,” whereas acknowledging that “there is more to do.”
But analysts cautioned that the bumper progress will not be sustained.
Thursday’s knowledge covers the interval earlier than April’s introduction of a hike to a business tax specified by the Labour authorities’s maiden price range in October.
It additionally precedes a baseline 10% tariff imposed on the U.Okay. and different nations by Trump final month.
“This might be as good as it gets for the year,” mentioned Capital Economics chief U.Okay. economist, Paul Dales.
‘Short-lived’
The progress spurt is “set to be short-lived as tariffs take effect,” mentioned Yael Selfin, chief economist at KPMG U.Okay.
Despite the announcement of a U.Okay.-U.S. commerce settlement final week, “tariffs on U.K. exports to the U.S. remain significantly higher than what they were before April,” she mentioned.
The U.S. deal reduces tariffs on British automobiles and removes these on metal and aluminum, whereas in return Britain will open up markets to U.S. beef and different farm merchandise.
But the baseline 10% tariff stays intact.
In addition, Selfin mentioned, “The indirect impact of trade tensions between the US and the EU will further constrain demand for UK exports.”
ONS director of financial statistics Liz McKeown mentioned that “the economy grew strongly in the first quarter of the year, largely driven by services, though production also grew significantly, after a period of decline.”
Analysts attributed the rebound in manufacturing to producers speeding to get forward of the implementation of Trump’s tariffs.
Separate commerce knowledge on Thursday confirmed that U.Okay. exports of products to the United States elevated for the fourth consecutive month in March.
“This pattern of increasing exports could be a sign of changing trader behavior ahead of tariff introduction,” the ONS mentioned.
“Any residual support for manufacturing from front-running will fade from here on, pointing to activity remaining weak for the foreseeable future,” cautioned economists at Pantheon Macroeconomics.
The ONS estimated that month-to-month GDP grew 0.2% in March, from a rise of 0.5% in February.
The knowledge comes after the Bank of England (BoE) final week lower its key rate of interest by 1 / 4 level to 4.25% as the specter of U.S. tariffs begins to weigh on financial progress.
The BoE additionally upgraded its outlook for annual GDP for 2025 to 1% progress from 0.75%, however lowered subsequent yr’s outlook to 1.25% from 1.5%.
Data on Tuesday confirmed that unemployment hit its highest stage since 2021 within the first quarter.
Source: www.dailysabah.com