Economic update: Higher-than-expected GDP growth
UK economic growth was higher than expected in the first quarter of 2025, but concerns about potential tariffs, inflation and interest rates persist.

UK economic growth was higher than expected in the first quarter of 2025, but concerns about potential tariffs, inflation and interest rates persist.
International organisations have lowered their growth forecasts since the US imposed tariffs on goods imports in April.
Sluggish GDP growth is expected to continue into early 2025, amongst weak business confidence. The government has made growth its “number one mission”.
Insight
UK economic growth has slowed in the second half of 2024, after a relatively strong start. Early indicators suggest Q4 growth may be close to or lower than Q3.
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Growth in the UK economy has slowed somewhat as businesses await the Labour’s October Budget.
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The UK exported £153 billion more than it imported in services in 2023, but it imported £204 billion more than it exported in goods.
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The average forecast of GDP growth for 2024 has been raised from 0.4% at the beginning of this year to 0.9%, with inflation falling back to its 2% target.
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Consumer prices inflation fell to 2.3% in April, but the Bank of England kept interest rates at 5.25% in May and other economic news remains mixed.
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An estimated 20.6 million people were out of work and not looking for work at the beginning of 2024. The recent rise has been attributed to long-term illness.
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The Bank of England is expected to cut interest rates in the summer, but high core and services inflation might delay the timing of future reductions.
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The Government cut National Insurance rates for employees from January but freezes to tax thresholds in April will increase personal taxes, in real terms.
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Inflation fell to 3.9% in November but the impact on households may have been higher.
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Amid low growth and high inflation, unemployment is rising and there is concern that continued high interest rates might cause trouble for households with debt.
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The Bank of England left interest rates unchanged at 5.25%. Falling inflation and low economic growth might mean interest rates will not need to increase further.
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GDP grew this summer but high rates of core and services inflation are leading to higher interest rates.
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