Money blog: UK economy grew more than expected in first three months of 2025 - official figures (2025)

The UK economy has recorded the fastest quarterly growth in the G7, an economist has told Sky News.

Simon French, chief economist at Panmure Liberum, said the figures were "good" and the "major takeaway" today was that the City will be upgrading its growth expectations for the year as a result.

The G7 is a group of seven of the world's largest advanced economies. It is made up of the UK, France, Germany, Italy, Japan and the US.

There has been concern that the 0.7% growth seen in the UK during the first three months of the year could have been uplifted by a rush of activity caused by tariffs being implemented by the US.

But, French said, the data showed the growth has been "largely driven" by the services part of the economy.

"While I expected undoubtedly that [tariffs] will impact the Q2 levels, I don't think we can attribute much of this to what went on in terms of the US trade announcements," he added.

Chancellor Rachel Reeves has said today's GDP figures show the "strength and potential" of the UK economy.

Reacting to the quarterly 0.7% growth that has been recorded, she says the government is making the "right choices" but there is "more to do".

"In the first three months of the year, the UK economy has grown faster than the US, Canada, France, Italy and Germany," she adds.

"Up against a backdrop of global uncertainty, we are making the right choices now in the national interest.

"But I know there is more to do, and that is why I'm determined we go further and faster to make working people better off."

Our economics and data editor Ed Conway has been analysing this morning's "punchy" quarterly GDP figure.

He says economists had expected strong growth, but it has exceeded predictions and is "considerably higher" than the figures reported in previous quarters.

The annual GDP rate has come in at 1.3% - above expectations of 1.2%.

"Taking all of this together, I imagine the chancellor will be pleased," says Conway, who is interviewing Rachel Reeves this morning.

However, he says that we should bear in mind how much of this GDP growth is a result of the "bounce that we have seen in advance of the tariffs being imposed by the United States".

"Obviously, everyone knew these tariffs were going to be coming in. A lot of manufacturers have been racing to get orders out to the US before those tariffs come in," Conway adds.

"All those exports are leaving the country, and then will we have a kind of retrenchment down towards a lower figure in the future quarters? No one really knows at the moment."

Watch Conway's analysis below...

BySarah Taaffe-Maguire, business and economics reporter

The UK economy showed strong growth in the first three months of the year, according to official figures.

Gross domestic product (GDP) - the standard measure of an economy's value - grew 0.7% in the first quarter of 2025, the Office for National Statistics said.

It's better than expected. A rise of just 0.6% was anticipated by economists polled by the Reuters news agency.

It's significantly better than the three months previous, in which slight economic expansion of just 0.1% was reported for the final quarter of 2024.

The ONS also said there was a small amount of growth last month, as GDP expanded 0.2% in March, which similarly beat expectations.

No growth at all had been forecast for the month.

Why?

A large contribution to high GDP growth was an increase in output in the production sector, which rose 1.1%, driven by manufacturing and a 4% increase in water supply, the ONS said.

Also working to push up the GDP reading was 0.7% growth in the biggest part of the UK economy - the services industry.

Wholesale, retail and computer programming services all performed well in the quarter, as did car leasing and advertising, the ONS said.

Welcome political news, for now

The data is welcome news for a government who have identified growing the economy as its number one priority.

Chancellor Rachel Reeves is taking the figures as a political win, saying the UK economy has grown faster than the US, Canada, France, Italy and Germany.

Such GDP numbers may not continue into April as businesses and consumers were hit with a raft of bill rises.

Last month, water, energy and council tax bills rose across the country while employers faced higher wage costs from the rise in their national insurance contributions and the minimum wage.

Basically, GDP is a tool used to assess the size and health of an economy.

It stands for gross domestic product and measures the monetary value of final goods and services produced in the country over a given period.

Generally, if GDP is growing, and inflation is in check, it's a strong sign that the economy is doing well, with more jobs and better wages available, and people spending more money.

If it's falling, it signals the economy is doing badly, often bringing with it lower incomes and job cuts.

Governments, businesses and economists monitor GDP growth among other indicators to understand where the economy stands - and where it's headed.

How is it measured?

GDP can be measured in three ways:

• Output- the value of goods and services produced by all sectors of the economy - construction, retail, manufacturing etc;
• Expenditure- money invested by businesses and spending by households and the government;
• Income- the total value of income generated by the production of goods and services in terms of company profits and employee benefits.
  

Output is the most often cited of the three, as it is the measure with the best information available to the Office for National Statistics (ONS).

The ONS, the UK's largest statistics authority, publishes GDP figures every month - one of only a small number of countries to do so. However, the monthly data is more volatile, meaning the quarterly figures, which cover three-month periods, are seen as more important.

That's what we're getting this morning.

What does GDP not include?

GDP is an important tool, but it's not perfect.

The International Monetary Fund cautions there are some things that GDP does not reveal, such as the overall standard of living or wellbeing of the country.

It points out that the quality of life can depend on how wealth is distributed among residents, and not just the overall level. Higher output may also come at the expense of leisure time or the running down of non-renewables, it notes.

GDP also excludes any unpaid work, such as childcare or looking after elderly relatives.

One of the best measures of living standards is GDP per capita - which reflects economic growth per head of the population. This also takes into account the effects of migration.

No growth can lead to recession

If GDP falls for successive three-month periods (quarters), the UK is in a technical recession.

During a recession, there's less money circulating: less money for workers from their employers, less money being spent in shops and restaurants, and less money going to the government in tax from wages to pay for things like benefits and public services.

By Sarah Taaffe-Maguire, business and economics reporter

At 7am, the eyes of every economist will be fixed on one number - GDP growth.

But it matters for our bank balances too, as it could influence interest rate decisions and what the government does to balance the books.

Every month,we learn how much or how little growth we saw in the standard measure of an economy's value through gross domestic product (GDP).

This government, like the last, has made growing the economy and this figure its priority.

But it can be a bit misleading.

Certainly,there are clearer ways to tell whether the economy expands. Mainly a thing called GDP per capita.

Basically,it tells us how much the economy is growing on a per-personbasis. It's more revealing, as the more people working in an economy, the larger it will be.

A country, like the UK, that's had a historically large number of migrants arriving is going to expand. So when you break that down to a per-personbasis,it controls for population growth.

Measuring GDP per capita can also give a better sense of how well or badly off we're feeling.

Cost of living pressures are more evident when you look at GDP per capita, rather than straight GDP, as that growth has tended to be lower in the UK.

Whenever our comments box is switched on, the topic we hear more about than any other is pensions.

It's a subject people young and old engage with - but the jargon can leave even the savviest Money blog reader scratching their heads.

Explained

Over the last few months, we've looked at the pros and cons of the two main options for getting your pension: drawdown and annuity...

One of the most common questions we are asked is why there are two kinds of state pension, depending on your age. Read the answer here...

We suggested at the top of this post that it isn't just older readers who care about this topic. This post, on how much temporarily pausing your pension contributions could cost you in the long term, was popular...

Another useful post from last year (a few of the figures are slightly out of date, but all the principles still apply) is all the discounts or freebies available to pensioners...

Further reading

A few weeks ago we brought you an exclusive on how a common error by employers could leave women who go on maternity leave out of pocket in retirement...

And earlier this year, we looked at how 2.3 million people are missing out on extra money for their pensions.

A total of 56% of workers who are paying higher or additional rates of tax pay into a personal pension - but 46% of those people do not claim pension tax relief on their contributions, investment platform InvestEngine found.

Read more here...

British Airways has used artificial intelligence to cut flight delays.

The airline has claimed the punctuality of its services from Heathrow Airport is more than two times better than in 2023 because of AI and other digital tools.

Two-thirds of departures from its west London base left ahead of schedule last month - more than double the rate achieved in the same month of 2023.

During the first three months of this year, 86% of flights from Heathrow departed on time - BA's best performance on record.

The airline said it has invested £100m in improving its operational resilience, using the money to develop digital tools and apps to help reduce delays.

One system proactively reroutes aircraft to avoid areas of poor weather, preventing some 4,050 hours of delays.

Rightmove and Nationwide Building Society have launched an online tool to help house-hunters see if they could get a mortgage on a specific home.

The "property lender check" gives potential buyers real-time information about their chances of getting a mortgage approved for a property before they view it or put in an offer.

Assessing typical risks on a listing, Nationwide can indicate whether it would be likely to lend on the property.

Stumbling blocks when looking for finance can sometimes arise with properties with short leases, those built from non-standard construction materials, homes in high flood-risk areas, and properties with structural issues.

It takes an average of five months to complete a sale, according to Rightmove, which is hoping the tool will make the process more efficient.

The checker has been launched alongside the property site's mortgage in principle - a feature that helps people to understand how much they are likely to be able to borrow.

Our last Cheap Eats interview here in the Money blog saw Great British Menu judge Lorna McNee reveal her favourite own brand product - so we're asking, what's yours and why?

McNee told use: "My favourite isthe Waitrose Basque cheesecake, hands down. It's ridiculously good. Rich, creamy, just the right amount of caramelised top... honestly, it's dangerous having it in the fridge."

Let us know your favourite supermarket own brand item in the comments box - and we'll feature a selection in the blog over the next week or so.