Relief for Reeves as 0.7% growth is confirmed for first quarter of 2025… but economists warn slowdown is already hitting amid tax hike fears
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Rachel Reeves was handed some relief today as the economy was confirmed as growing 0.7 per cent in the first quarter.
Official figures showed the powerhouse services sector expanding by 0.7 per cent between January and March.
Production was also up 1.3 per cent over the three months, although construction recorded a mediocre 0.3 per cent improvement. Overall the expansion was the best in a year.
However, economists have been warning that a slowdown is already happening after the impact of Labour’s huge tax raid on businesses and Donald Trump’s trade war. GDP fell by 0.3 per cent in April.
Fears are mounting that the Chancellor will have to hike taxes again to fill a burgeoning black hole in the government’s spending plans.
The situation has been worsened by Keir Starmer’s humiliating U-turns on winter fuel and health and disability benefits.
Those two changes alone could leave the Treasury having to find another £4billion a year by the end of the Parliament, while pressure it ramping up for more spending on defence.
Rachel Reeves was handed some relief today as the economy was confirmed as growing 0.7 per cent in the first quarter
While quarterly growth was unrevised, the performance in March was slightly better than the 0.2 per cent initially detected, at 0.4 per cent.
January saw zero growth and February saw expansion of 0.5 per cent, both unrevised.
Liz McKeown, ONS director of economic statistics, said: ‘While overall quarterly growth was unrevised, our updated set of figures show the economy still grew strongly in February, with growth now coming in a little higher in March too.
‘There was broad-based growth across services while manufacturing also had a strong quarter.
‘The saving ratio fell for the first time in two years this quarter, as rising costs for items such as fuel, rent and restaurant meals contributed to higher spending, although it remains relatively strong.’
