UK Economy Outperforms Forecasts with Strong First Quarter Growth

(MENAFN) New data released by the Office for National Statistics (ONS) on Thursday revealed that the UK economy has outperformed market forecasts, experiencing a robust 0.7 percent increase in GDP during the first quarter of 2025.

This positive result follows earlier figures indicating a flatlining economy in January and a 0.5 percent expansion in February. Contrary to predictions of zero growth for March, the latest data showed a 0.2 percent rise, significantly boosting the overall quarterly performance.

The service sector, a key driver of the UK economy, saw a significant rebound, growing by 0.7 percent after a modest 0.1 percent increase in the final quarter of 2024. Notable contributions came from wholesale, retail, transport, and communications services. Helen Dickinson, chief executive of the British Retail Consortium, highlighted that falling shop prices, driven by declining food costs and intense retailer competition, had benefited households and supported the service sector's growth.

In a further positive surprise, British manufacturing ended a three-quarter period of decline, showing unexpected growth in the first quarter of 2025. The ONS attributed this recovery largely to the automotive and machinery sectors, with machinery manufacturing increasing by 3.8 percent and transport equipment production rising by 2.7 percent compared to the previous quarter. Analysts suggested that a significant surge in output during February was likely due to companies accelerating shipments ahead of impending new tariffs in the United States.

However, the construction sector presented a contrasting picture, showing no growth compared to the previous quarter and indicating a possible downturn.

Stronger-than-forecast economic growth in the first quarter of 2025 has offered a welcome boost for the UK government. Chancellor Rachel Reeves hailed the figures as evidence of the UK economy's underlying strength and potential. However, she also tempered enthusiasm, acknowledging the need for continued effort.

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