Firms raced to outpace Donald Trump’s incoming tariff blitz, fuelling a surprise economic boom in early 2025 — but darker days may still lie ahead

In a defiant twist few saw coming, the UK economy surged by 0.7% in the first quarter of 2025, defying gloomy forecasts and outpacing its G7 peers. This unexpected growth burst through the fog of economic fear, powered by a frantic rush of business activity ahead of Donald Trump’s chaotic tariff regime.

The Office for National Statistics (ONS) revealed that Britain’s gross domestic product climbed faster than economists had predicted. City experts had estimated a 0.6% rise — reality delivered more. The growth follows a meagre 0.1% increase in the final quarter of 2024, making this spike even more striking.

Behind this boost lies a whirlwind of investment and export manoeuvres. British firms scrambled to buy equipment and ship goods overseas before Trump’s “liberation day” tariffs landed on 2 April. Companies threw cash at aircraft, machinery, and IT infrastructure in a bid to dodge the economic shrapnel from Washington’s incoming trade war.

Service industries — the backbone of the UK economy — carried much of the load. Retail and wholesale markets thrived. Computer programming, advertising, and car leasing businesses reported brisk trade. Yet it wasn’t all sunshine. Education, telecoms, and legal services slipped slightly, pulling the sector’s balance sheet in mixed directions.

Production industries didn’t sit idle either. Manufacturing, mining, and energy lifted the sector by 1.1%. Construction, however, stood still — neither growing nor shrinking.

The strong start to 2025 has offered Chancellor Rachel Reeves a rare moment to breathe. Business leaders had fiercely criticised her £25bn hike in employer national insurance contributions, warning it could strangle growth. But this latest data gives her room to argue otherwise.

“Up against a backdrop of global uncertainty, we’re making the right choices,” Reeves said. “We’ve cut interest rates four times, signed two trade deals, saved British Steel, and raised the minimum wage for millions.”

Economists, however, remain cautious. They note that much of the quarter’s growth is borrowed time. Paul Dales from Capital Economics called the rise “completely at odds” with the collapse in business confidence since Reeves’s budget and Trump’s tariff plans emerged.

Export volumes soared 3.5% — the first increase in four quarters. International trade alone added 0.4 points to GDP. Sanjay Raja of Deutsche Bank highlighted what many suspect: “It is clear some frontrunning of trade was in play.”

Keir Starmer’s government has moved quickly to contain the shockwaves. Alongside a fresh trade agreement with India, the PM has secured a limited tariff-reduction deal with the US, easing the blow on cars, aluminium, and steel. Next week, Starmer heads to a high-stakes summit with Brussels, aiming to rekindle trade ties strained by Brexit.

February’s 0.5% surprise growth hinted at momentum, but March sealed it, as GDP rose by 0.2% — again beating forecasts of stagnation.

British consumers, despite a downbeat mood in surveys, have shown resilience. They kept spending. They kept going. But with global uncertainty rising and the Bank of England now warning of near-stagnant conditions for the rest of the year, this strong first quarter may be a high point, not a new normal.

Shadow Chancellor Mel Stride offered a blunt warning: “Yes, the economy is growing — but don’t be fooled. The government’s tax hikes and a fragile global landscape could wreck that progress fast.”