UK economy grows by more than expected in major boost for Rachel Reeves

Responding the news, Chancellor Rachel Reeves said the growth figures showed Labour was "making the right choices” - but acknowledged "there is more to do".

She said: "Today’s growth figures show the strength and potential of the UK economy. In the first three months of the year, the UK economy has grown faster than the US, Canada, France, Italy and Germany.

"Up against a backdrop of global uncertainty we are making the right choices now in the national interest.

"Since the election we have already had four interest rate cuts, signed two trade deals, saved British Steel and given a pay rise to millions by increasing the minimum wage.

"Our plan for change is working. But I know there is more to do and that is why I’m determined we go further and faster to make working people better off.”

Professor Joe Nellis, an economic adviser for MHA, noted that today's GDP figures will be "welcome news" for the Labour Government.

He explained: "To maintain the Chancellor’s slim fiscal headroom, economic growth is imperative — without the subsequent increase in tax revenues the government cannot stick to its fiscal plans.

"A key factor in this growth has been the resilience of consumer activity — the rise in retail sales each month in Q1, driven by net positive real earnings growth and sunny weather, is reflective of this and will have contributed to the uptick in GDP in Q1.

"This is alongside the one-off stimulus of government spending from the Autumn Budget and a front-loading of export purchasing ahead of tariff imposition.

"However, this uplift is likely to be only temporary. Increased government spending and the rush for exports were by their nature one-time boosts that are not repeatable catalysts for sustainable growth."

Kevin Brown, Savings Specialist at Scottish Friendly comments on this morning’s GDP figures, added: "This round of gross domestic product data is undoubtedly encouraging, building on the UK economy’s strong showing in February.

"It suggests that in spite of the tax rises announced in the budget and multiple sources of global economic uncertainty, the UK economy has some resilience. It could yet prove the naysayers wrong."

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Liz McKeown, ONS director of economic statistics, said: "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.

"Growth in services was broad based, with wholesale, retail and computer programming all having a strong quarter as did car leasing and advertising. These were only slightly offset by falls in education, telecoms and legal services."

On the figures, Prime Minister Keir Starmer said: "The UK now has the fastest growth in the G7 – our Plan for Change in action.

"We've had four interest rate cuts since July and wages are rising faster than prices. But I know the Tory cost of living crisis isn’t over – we will go further and faster to deliver for working people."