Key facts
- UK economy grew 0.6% in Q1, exceeding initial expectations.
- Services sector was the main driver of Q1 growth.
- Business investment increased by 0.9% in the first quarter.
- The current account deficit deepened to -£22.2bn.
- 2025 growth forecast revised down to 1.3% from 1.4%.
- Andy Burnham is set to become Prime Minister in mid-July.
The UK economy expanded by 0.6% in the first quarter, according to revised figures from the Office for National Statistics (ONS). This growth, driven primarily by the services sector, exceeded initial expectations, with business investment also showing a slight increase of 0.9%. However, the overall economic picture is tempered by a downward revision to last year's growth and a widening current account deficit of -£22.2bn. The economy also experienced a 0.1% contraction in April.
Despite the first-quarter growth spurt, Chancellor Rachel Reeves faces political uncertainty, with Andy Burnham expected to take over as Prime Minister in mid-July. Burnham has outlined a 10-year vision for the UK economy centered on devolution, increased public control over utilities, and reforms to public procurement, aiming to boost living standards across all regions. He also proposed changes to business rates and a focus on reindustrialization.
While industry groups like TheCityUK have welcomed Burnham's emphasis on growth and private sector collaboration, some analysts express concerns about policy clarity. Mark Smith of Ayming UK highlighted the need for a clear and consistent industrial strategy, citing recent policy "U-turns" as a hindrance to long-term business investment.