UK economy grew by 0.6% in first quarter as 2025 growth revised down

Final figure for growth last year was revised down slightly to 1.3 per cent

The UK economy expanded by 0.6 per cent in the first quarter of the year, the Office for National Statistics has confirmed, though the final growth figure for last year was nudged slightly downwards.

The ONS announced on Tuesday that the UK economy grew at a faster rate than many had anticipated at the start of the year, with GDP climbing by 0.6 per cent.

Real GDP per head rose by 0.6 per cent in the first quarter of the year.

Businesses rushed to build up stockpiles while activity surged rapidly as tensions in Venezuela and the Middle East intensified, according to official figures.

The data may prove bittersweet for Chancellor Rachel Reeves, who is expected to be removed from her post as Andy Burnham takes over at Number 10 in mid-July, despite having presided over a period of economic expansion, as reported by City AM.

The UK economy contracted by 0.1 per cent in April, the second month of the Iran war, the ONS confirmed earlier this month.

The ONS also revised growth for 2025 marginally downwards to 1.3 per cent, rather than the previously reported 1.4 per cent.

Liz McKeown, director of economic statistics at the ONS, said: “Services were the main driver of growth in the latest quarter, with strengths in computer programming, wholesale and advertising only offset by falls in rental companies and recruitment agencies.”

While the ONS recorded overall growth of 0.6 per cent, business investment reached approximately 0.9 per cent in the first quarter of the year, coming in slightly ahead of expectations. The current account for trade also deteriorated further, with the balance falling to –£22.2bn.

City economists have cautioned that international trade disruption stemming from the Iran war could knock up to around 0.3 percentage points off UK economic growth, while inflation could remain above three per cent for the remainder of the year.

This leaves an incoming Prime Minister Burnham facing a challenging in-tray, despite a broad promise to oversee the biggest transformation of British politics in a lifetime.

Speaking on Monday, Burnham outlined plans to raise living standards through a 10-year programme centred on devolution, “greater” public control of utilities and “social value” reforms to areas such as public procurement.

The former Greater Manchester mayor pledged to deliver “good growth” that would be felt across all regions of the country. He indicated he would overhaul business rates to bolster high streets and pubs, while also seeking to “reindustralise” communities that have witnessed factory closures.

Industry bodies broadly welcomed Burnham’s push for stronger growth and closer collaboration with the private sector, with TheCityUK’s Miles Celic describing devolution as “vital” for businesses.

However, some analysts cautioned that the landmark speech fell short of offering concrete policy detail. Mark Smith, a managing director at professional services firm Ayming UK, raised concerns over corporation taxes and the government’s industrial strategy.

Smith said: “If Andy Burnham does become Prime Minister, he needs to set out a clear plan for business early on and, importantly, stick to it. Since Labour came to power, we’ve seen too many U-turns and too much speculation around key policy areas. That makes it incredibly difficult for businesses to plan ahead and commit to long-term investment.”