The UK economy expanded by 0.7% in the first quarter of 2025, marking the strongest quarterly growth since early 2024, according to data released by the Office for National Statistics. This growth was driven by a surge in housing purchases ahead of anticipated tax changes, along with increased industrial output as businesses accelerated production prior to the introduction of new U.S. tariffs on select British goods.

Revised figures for March show that monthly GDP growth was upgraded from 0.2% to 0.4%. However, this adjustment did not alter the overall quarterly growth rate. Early data for April, however, indicates a contraction of 0.3% compared to March, attributed to temporary factors such as maintenance shutdowns and public holidays, raising concerns that the early-year momentum may not be sustained throughout the coming months.

Full-year growth for the UK is expected to remain modest amid a backdrop of structural challenges including weak investment activity, elevated living costs, and ongoing uncertainty surrounding trade relations with both the European Union and the United States. Tighter monetary policy aimed at curbing inflation may also exert downward pressure on domestic demand in the second half of the year.

In comparison to other major European economies, the UK outperformed its peers in the first quarter. France recorded economic growth of just 0.2%, while Germany posted a marginal 0.1% increase, reflecting continued weakness in industrial demand and export performance. The eurozone as a whole reported a growth rate of 0.3% during the same period. As a result, the UK led the region in economic performance at the start of 2025, though much of this strength appears to stem from temporary factors rather than a fundamental improvement in economic structure.