UK economy grows 0.7% in early 2025

The UK economy expanded by 0.7% in the first quarter of 2025, its fastest growth in more than a year, according to the latest figures released by the Office for National Statistics (ONS). The unexpectedly strong performance offers a glimmer of optimism after months of sluggish growth.

Following a modest 0.1% expansion in the final quarter of 2024, the UK’s gross domestic product (GDP) rebounded in the January-to-March period, driven largely by gains in the services and production sectors. Services, which make up the largest share of the UK economy, grew by 0.7%, while production output climbed by 1.1%. The construction sector, however, remained flat.

In terms of spending, the ONS reported that growth was fuelled by increased gross fixed capital formation, stronger net trade, and a rise in household consumption — signs that businesses and consumers alike are regaining confidence.

Nominal GDP rose by 1.6% in the quarter, with the increase mainly attributed to higher compensation of employees. Meanwhile, real GDP per head — a key measure of living standards — rose by 0.5%, marking the first increase after two consecutive quarterly declines.

Mike Randall, CEO of Simply Asset Finance, said the figures align with what many in the business sector have been observing on the ground.

“Stronger than expected GDP growth in the first quarter reflects what we’ve seen on the ground – businesses have remained active and confident in the face of ongoing economic pressure. But this is just the starting point. The challenge now is to build on that momentum and move decisively towards sustainable, long-term growth.”

Randall urged the government to accelerate the rollout of its industrial strategy, stressing the importance of small and medium-sized enterprises (SMEs) in driving future expansion. “With policy execution, access to capital and targeted infrastructure investment, SMEs can fuel the growth the country urgently needs,” he added.