UK Economy Grew At Fastest Pace In A Year In The First Quarter Before Expected Slowdown

• Britain's economy grew at its fastest pace in a year in the first three months of 2025 as homebuyers rushed to beat a deadline on property purchases and manufacturers sped up output ahead of U.S. President Donald Trump's higher import tariffs.
• In a bounce that is not expected to be maintained in the rest of 2025, output grew by 0.7%, confirming a preliminary estimate and the fastest quarterly pace since the first three months of 2024, the Office for National Statistics said.
• The jump in economic output in early 2025 contrasted with the growth of just 0.1% in the fourth quarter of 2024. Data suggests that gross domestic product fell by 0.3% in April from March, but the drop was exacerbated by one-off factors.
• Thomas Pugh, chief economist at audit firm RSM UK, said weak consumer spending and hiring figures in recent weeks were likely to be a one-off reaction to a tax increase on employers and Trump's tariffs, many of which have been suspended. "Now that uncertainty has started to recede, consumer confidence is rebounding, and business surveys point to the worst of the labour market pain being behind us," Pugh said.
• Still, the Bank of England (BOE) expects economic growth of about 0.25% in the second quarter of this year. Expectations for the central bank to cut interest rates twice more over the remainder of 2025 is likely to support household spending. However, a renewed rise in energy prices in the event of further conflict in the Middle East could add to the strains on the already slow-growing economy.

(Source: Reuters)