These are punchy gross domestic product (GDP) numbers and no mistake.
Growth of 0.7% in the first quarter is not just strong; it’s stronger than the 0.6% most economists had expected. GDP per head, a better measure of living standards (since it divides the total amount of income generated across the economy by the population), was up 0.5%.
And compare the UK to our other counterparts in the G7 group of industrialised economies, and the UK looks like it had the strongest growth of all in the first quarter.
There is, in short, much for Rachel Reeves to celebrate in these figures.
But there is a nagging doubt, too. The key bit of context here is the one you will be very aware of: Donald Trump’s trade war. The US president’s tariffs have caused such a roller coaster of economic activity in recent months that it would be surprising if it were not reflected in growth estimates.
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In the case of the UK, that has resulted in an unusually sharp increase in exports and investment in the first quarter of the year – mostly spending on aircraft, IT equipment and machinery, all sectors targeted by the US in those early tariff announcements. In other words, it’s quite likely that much of this quarter’s GDP represents businesses front-running the tariffs, buying in machinery and sending out exports to the US ahead of the deadlines imposed by the White House.
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If this is indeed a one-off bump, then that suggests this quarter’s numbers are unlikely to be repeated. And indeed that’s the Bank of England’s expectation – that underlying economic growth drops back to 0.1% in the coming quarters, far from “going gangbusters”. Indeed, the Bank’s figures look positively dreary.
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But this, too, could prove to be wrong. In short, the economy – both domestically and internationally – is about as unpredictable as it has ever been.
