UK economy makes strong start to 2025 – but it’s unlikely to last

The UK economy made a stronger than expected start to 2025, with GDP growing by 0.7 per cent in Q1. But recent history, more recent data, and wider global uncertainty, all suggest that Britain’s growth rebound is unlikely to last, the Resolution Foundation said today (Thursday).

GDP grew by 0.7 per cent in Q1 2025, and by 0.5 per cent on a per capita basis – the measure that better tracks household incomes and is the focus of the Government’s central economic milestone.

But Britain has been here before. In the past three years (2022-2024), the GDP growth peaked in Q1, only for it to fall away over the rest of the year.

More recent composite PMI data in April, which fell to 48.5 (the lowest since September 2023) and weak labour market data (payrolled employment fell by 36,000) suggest that growth has already started to slow.

Furthermore, pre-emptive trade flows ahead of President Trump’s tariffs are likely to have made GDP measurement particularly difficult in Q1. UK net exports accounting for more than half (0.4 percentage points) of quarterly growth. Tariff-induced global economic uncertainty is set to be a further brake on growth in the coming months too.

The Foundation adds that despite today’s welcome figures, GDP per capita remains 0.4 per cent lower than it was before the pandemic (Q4 2019).

Simon Pittaway, Senior Economist at the Resolution Foundation, said:

“The UK economy has made a stronger than expected start to 2025, growing at a healthy 0.7 per cent.

“But this growth rebound is unlikely to last, with data for April looking far weaker, and huge tariff-shaped clouds hanging over the global economy.

“These growth headwinds are all the more alarming given Britain’s recent economic record – with GDP per person still lower today than it was before the pandemic.”