UK becomes fastest-growing G7 economy after strong first quarter

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LONDON (AP) — The British economy grew at its fastest rate in a year during the first quarter of 2025, official figures showed Thursday, in a welcome boost to the Labour government, which has made lifting the country’s growth its top priority.

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The Office for National Statistics said growth, as measured by gross domestic product, increased by 0.7% in the first quarter of the year from the final three months of 2024, with the country’s dominant services sector doing particularly well.

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The first quarter increase makes the British economy the fastest-growing among the Group of Seven leading industrial nations.

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Growth was modestly ahead of market expectations for a 0.6% increase. It was also the biggest increase since the first quarter of 2024, when the economy expanded by 0.9%.

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Treasury chief Rachel Reeves welcomed the growth leap, and said the figures showed the choices made by Labour since it was elected last July were beginning to pay off.

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“We’re set to be the fastest growing economy in the G-7 in the first three months of this year and that’s incredibly welcome, but I know that there is more to do,” she said.

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Most economists think is likely to slow down in the second quarter of the year, partly because of the global uncertainty generated by U.S. President Donald Trump’s tariff policies.

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Though most tariffs were paused for 90 days following the ensuing market turmoil, including the 10% baseline tariff applied to U.K. goods entering the U.S., the backdrop for the global economy remains highly uncertain, particularly if the U.S.-China trade war persists.

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Some of that uncertainty, with regard to the British economy, lifted Thursday when both Trump and British Prime Minister Keir Starmer separately outlined details of a trade deal between the U.S. and the U.K. Though Trump kept the 10% baseline tariffs on U.K., he agreed to reduce the levies on British autos, steel and aluminum.

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Sanjay Raja, chief U.K. economist at Deutsche Bank, said the growth uptick will likely be short-lived, especially during the second quarter when trade uncertainty will be at its peak.

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“Exporters will likely see reduced demand as well from higher U.S. tariffs and weaker global demand,” he said.

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Economists said growth will likely falter in the second quarter as new taxes on business were imposed in April. Also a raft of price rises during the month, including domestic energy and water bills, are expected to keep a lid on consumer demand.

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