BUSINESS LIVE: GDP beats estimates at 0.7%; B&M names new CEO; United Utilities profits surge

Anna Leach, Chief Economist at the Institute of Directors, said:

‘All in all, it is no bad thing that the UK seems to have entered the April turmoil in good economic shape.”

‘UK growth seems unlikely to maintain its Q1 strength over the rest of this year. Tariff turmoil and its impacts on consumer and investment spending will push down on activity in coming months as it delays decision-making and increases the desire for precautionary saving buffers.

‘While consumer spending should continue to be supported by real earnings growth and further falls in interest rates, the labour market is softening rapidly amidst significant increases in employment costs.

‘The sharp rise in uncertainty pushes down further on investment appetite among businesses already seeing profits pressured by rising costs.

‘But amidst the noise, there are a number of notable policies expected from the UK government in the coming weeks: industrial strategy and the 10 year infrastructure plan provide opportunities to cut through and enable businesses to see a sense of direction for the UK economy.’

Thomas Pugh, economist at RSM UK:

‘On the quarterly spending measure, there was a surge in business investment, which grew by 5.9% and net trade added 0.4ppts.

‘However, the strength of both of these categories is probably due to firms bringing forward activity ahead of US tariffs and April tax increases.

‘Indeed, despite the relatively strong performance of consumer-facing industries in Q1, household spending only rose by 0.2% q/q and government spending contracted by 0.5%.

‘The big, and obvious, question now is how will the recent tariff developments impact that positive momentum.

‘There has been a clear hit to consumer confidence and business sentiment, which will translate into a sharp slowdown in growth in Q2.

‘There is a real risk of a contraction in Q2 as it looks like much of the strength in Q1 was due to firms bringing forward activity.’

The British economy grew by more than expected in the first quarter of 2025 thanks to a boost from the services and production sectors, according to the Office for National Statistics.

GDP expanded by 0.7 per cent in the first three months of the year, beating forecasts of 0.6 per cent and recording its fastest rate in a year.

March showed the strongest outperformance of economists’ expectations, with the economy expanding by 0.2 per cent compared to forecasts of zero growth.