UK has quickest rising economic system in G7 in enhance for Starmer | EUROtoday

On May 15, 2025

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Britain’s economic system is “beginning to turn a corner”, the chancellor stated as new figures present it grew by greater than anticipated, turning into the fastest-growing within the G7.

GDP rose by 0.7 per cent within the first three months of 2025 – the quickest fee in a 12 months – in line with the Office for National Statistics.

Sir Keir Starmer seized on the figures, describing them as “very good and very welcome”.

Rachel Reeves admitted “we still have more to do” to repair the nation’s sluggish economic system, however added: “I absolutely understand that the cost of living crisis is still real for many families, but the numbers today do show that the economy is beginning to turn a corner.”

The figures had been for the primary quarter of 2025, the interval straight earlier than Donald Trump unveiled his “liberation day” tariffs in early April.

The figures are a welcome boost for Rachel Reeves — The figures are a great addition for Rachel Reeves (POOL/AFP by way of Getty Images)

While the figures are a great addition for the prime minister and chancellor, after the economic system stagnated via Labour’s first six months in energy, specialists warned they had been artificially inflated by corporations boosting manufacturing in a bid to dodge the US president’s tariffs.

Mr Trump imposed sweeping levies on international locations world wide – together with the UK – which despatched world markets tumbling and prompted financial instability.

The figures additionally cowl the interval earlier than the chancellor’s employer nationwide insurance coverage hike kicked in and because the nationwide residing wage enhance and employment rights invoice are additionally anticipated to weigh on companies and hit financial development in future.

Gross Domestic Product (GDP) grew faster than expected and at the fastest rate in a year over the first quarter of 2025(Yui Mok/PA) — Gross Domestic Product (GDP) grew sooner than anticipated and on the quickest fee in a 12 months over the primary quarter of 2025(Yui Mok/PA) (PA Wire)

But Ms Reeves added: “In the first three months of the year, the UK economy has grown faster than the US, Canada, France, Italy and Germany. Up against a backdrop of global uncertainty we are making the right choices now in the national interest.” Both acknowledged there may be “more work to do”.

The 0.7 per cent development means it got here in forward of economists’ expectations of 0.6 per cent development for the quarter. It was additionally the very best GDP fee for the reason that first quarter of 2024, when the economic system jumped by 0.9 per cent.

Economists on the Confederation of British Industry (CBI) stated the rise in exercise was “a pleasant surprise”, however warned the power of GDP over Q1 is “likely to prove a one-off”.

“Businesses remain cautious over hiring and investment plans given the steep rise in employment costs following the Autumn Budget,” Ben Jones, lead economist at CBI stated.

Company national insurance contributions increased from April, which some economists have said will force firms to cut jobs. — Company nationwide insurance coverage contributions elevated from April, which some economists have stated will power corporations to chop jobs. (Gareth Fuller/PA Wire)

“Now is a critical time for government to hardwire growth into the economy through the upcoming Spending Review.”

The newest figures present that financial development slowed to 0.2 per cent in March, from 0.5 per cent in February, as exercise amongst UK factories started to droop.

Ministers additionally acknowledged that the most recent GDP figures don’t but account for the impression of the Government’s hike in nationwide insurance coverage contributions for employers.

The US imposed a 10 per cent blanket tariff on most UK goods entering the world’s biggest economy — The US imposed a ten per cent blanket tariff on most UK items getting into the world’s largest economic system (Getty Images)

Shadow chancellor Sir Mel Stride additionally identified that each the Office for Budget Responsibility (OBR) and the International Monetary Fund (IMF) had downgraded short-term development forecasts and hit out on the hike in employers’ nationwide insurance coverage, which he branded a “jobs tax”.

“While it’s welcome the economy is growing, both the OBR and IMF have downgraded the UK’s growth,” Sir Mel stated.

“Labour’s jobs tax, unemployment bill and reckless choices have seen the number unemployed rise by 10% and working families £3,500 worse off.”

Shadow chancellor Sir Mel Stride hit out at the hike in employers’ national insurance, which he branded a “jobs tax”. — Shadow chancellor Sir Mel Stride hit out on the hike in employers’ nationwide insurance coverage, which he branded a “jobs tax”. (Getty Images)

Growth Commission member Ewen Stewart stated the figures “flatter to deceive” and cautioned that “the underlying position of the economy remains very weak”.

He added: “The more important matrix is not headline GDP but real GDP per capita, which better reflects overall living standards. While this grew by 0.5 per cent in Q1, this is on the back of declines in the previous two quarters.

“Moreover, real GDP per capita has barely increased since 2020, which is unprecedented in modern economic history.

“Substantial tax rises – notably increased employers’ NICS – only took effect in April and are sure to compound the growth crisis the UK faces. This crisis is largely self-inflicted as increased taxation, weakly controlled public spending and ever-increasing regulation strangles optimism and potential.”

https://www.independent.co.uk/news/uk/home-news/economy-growth-rachel-reeves-business-b2751363.html