UK economy defies pessimism to grow 0.7% in first quarter of year

The UK economy grew at the fastest pace in a year between January and March, defying warnings of a collapse in activity, as businesses scrambled to invest and export before Donald Trump's sweeping tariffs.

- Richard Partington

The Office for National Statistics said gross domestic product (GDP) rose by 0.7% in the quarter, beating City predictions of a 0.6% rise and continuing an expansion after growth of 0.1% in the final quarter of last year.

Driven by Britain's dominant services sector, the latest snapshot will bolster the chancellor, Rachel Reeves, after business leaders had warned earlier this year that her tax policies would hit jobs and growth.

Economists warned that growth later in the year was likely to be much weaker amid concerns over the fallout from the US president's erratic tariff plans after his "liberation day" announcement on 2 April.

The ONS said growth in the service sector economy was broad-based over the first quarter, with retail, wholesale and computer programming having a strong start to the year, as did car leasing and advertising. This was slightly offset by falls in education, telecoms and legal services.

Alongside growth of 0.7% in the service sector, production – which includes manufacturing, mining and energy – rose by 1.1%, while the construction sector showed no growth.