Before being hit by both the tax increase and the trade war with the USA, the United Kingdom's economy achieved its strongest quarterly growth in a year.
According to Zhitong Finance APP, before being hit by the dual blows of increased taxes and the USA trade war, the United Kingdom's economy achieved its strongest quarterly growth in a year. The United Kingdom's Office for National Statistics announced on Thursday that the country's GDP grew by 0.7% in the first quarter, accelerating from the 0.1% growth at the end of 2024, and exceeding the 0.6% expected by the Bank of England and private sector economists.
The service industry boosts the United Kingdom's economy.
In March alone, output in the United Kingdom grew by 0.2%, rather than the stagnation predicted by economists. This indicates that, despite significant tax increases hitting employers and the impending announcement of global tariffs by President Trump, British businesses and consumers remain resilient. Both the service and construction industries experienced strong growth, offsetting a sharp decline in manufacturing.
After the release of stronger-than-expected data, the British Pound rose 0.2% against the dollar to 1.3289. The currency market slightly adjusted its bets on an interest rate cut by the Bank of England, expecting another cut of 40 basis points by the end of this year.
Accelerated economic growth is bullish news for the Labour government in the United Kingdom. Since taking office last summer, the Labour Party has been striving to promote economic development. In the first three months of 2025, per capita GDP (a key indicator of living standards) grew by 0.5%, rebounding after two consecutive quarters of decline.
However, economists urge caution. The strong growth in the first quarter was due to robust expansion in February, as factories increased production in an attempt to boost exports to the USA before Trump's tariffs took effect.
The Bank of England predicts that economic growth will slow to 0.1% in the second quarter, and there are "downside risks," as the central bank believes the fundamentals remain stagnant.
The Bank of England expects a significant slowdown in the economy this quarter.
In April, consumers in the United Kingdom were also hit by rising utility bills and local taxes, which added greater pressure on bars and other Dining establishments.
In the Bank of England's new forecast last week, it was stated that the economic growth rate would remain around 1% in 2025, with a slight rebound expected next year.
Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales, stated: "This strong quarterly data may represent the peak of economic growth this year, and due to increased taxes and tariffs, alongside the impact of global uncertainty, future economic activity may sharply slow down."
