United Kingdom posts remarkable economic growth in Q1, propelling it to the forefront among G7 nations.
The scorching pace of the UK economy's first quarter growth, though promising, may be short-lived. According to the Office for National Statistics, the economy expanded by a whopping 0.7% in Q1 of 2025, with the services sector leading the charge. The UK's economic growth outpaced the rest of the G7 nations, but experts are sounding the alarm bells.
Why the Warning?
Uncertainty looms large, primarily due to the new taxes imposed on UK businesses in April and the global economic unease caused by US President Donald Trump's tariff policies. While market turmoil led Trump to halt most tariffs temporarily, the 10% baseline tariff on UK goods entering the US remains in place. This tariff, coupled with weaker global demand, could put the brakes on export-driven sectors and overall growth.
Looking Ahead
Economist Sanjay Raja predicts the growth spike will be short-lived, particularly during the second quarter when trade uncertainty is at its peak. Furthermore, high interest rates, low consumer confidence, and inflationary pressures are likely to weigh on aggregate demand, restraining consumer spending. The performance of key sectors like manufacturing and services will also play a significant role in determining the economy's trajectory.
- G7
- British economy
- Global trade uncertainty
- Tariffs
- Business taxes
- UK GDP
- Consumer confidence
Enrichment Data Snippet: New taxes on businesses and global trade uncertainty, particularly from tariffs, could potentially slow down economic growth by increasing costs, reducing investment, and dampening consumer spending.
The warning issued by experts stems from the new taxes imposed on UK businesses, which could increase costs and, in turn, reduce investment, potentially slowing down the growth of the British economy. The global economic unease due to US President Donald Trump's tariff policies, including the 10% baseline tariff on UK goods entering the US, further fuels this uncertainty in global trade, which could put a halt on export-driven sectors and the overall growth of the UK.
