Britain's economy expanded slightly more than expected in the first quarter, official data showed Thursday, covering the period before business tax hikes and U.S. President Donald Trump's tariffs blitz took effect.
Gross domestic product (GDP) rose 0.7% in the January-to-March period after only growing slightly in the final quarter of last year, the Office for National Statistics (ONS) said in a statement.
It beats economists' expectations of a 0.6% increase.
The data comes as a boost for Prime Minister Keir Starmer and his Labour government, which struggled to kickstart stagnant growth since coming to power in July.
U.K. Treasury chief Rachel Reeves welcomed the news, saying the figures "show the strength and potential of the U.K. economy," while acknowledging that "there is more to do."
But analysts cautioned that the bumper growth may not be sustained.
Thursday's data covers the period before April's introduction of a hike to a business tax laid out in the Labour government's maiden budget in October.
It also precedes a baseline 10% tariff imposed on the U.K. and other countries by Trump last month.
"This might be as good as it gets for the year," said Capital Economics chief U.K. economist, Paul Dales.
The growth spurt is "set to be short-lived as tariffs take effect," said Yael Selfin, chief economist at KPMG U.K.
Despite the announcement of a U.K.-U.S. trade agreement last week, "tariffs on U.K. exports to the U.S. remain significantly higher than what they were before April," she said.
The U.S. deal reduces tariffs on British cars and removes those on steel and aluminum, while in return Britain will open up markets to U.S. beef and other farm products.
But the baseline 10% tariff remains intact.
In addition, Selfin said, "The indirect impact of trade tensions between the U.S. and the EU will further constrain demand for U.K. exports."
ONS director of economic statistics Liz McKeown said that "the economy grew strongly in the first quarter of the year, largely driven by services, though production also grew significantly, after a period of decline."
Analysts attributed the rebound in production to manufacturers rushing to get ahead of the implementation of Trump's tariffs.
Separate trade data on Thursday showed that U.K. exports of goods to the United States increased for the fourth consecutive month in March.
"This pattern of increasing exports could be a sign of changing trader behavior ahead of tariff introduction," the ONS said.
"Any residual support for manufacturing from front-running will fade from here on, pointing to activity remaining weak for the foreseeable future," cautioned economists at Pantheon Macroeconomics.
The ONS estimated that monthly GDP grew 0.2% in March, from an increase of 0.5% in February.
The data comes after the Bank of England (BoE) last week cut its key interest rate by a quarter point to 4.25% as the threat of U.S. tariffs starts to weigh on economic growth.
The BoE also upgraded its outlook for annual GDP for 2025 to 1% growth from 0.75%, but lowered next year's outlook to 1.25% from 1.5%.
Data on Tuesday showed that unemployment hit its highest level since 2021 in the first quarter.
