UK GDP grows and continues riding out the storm

UK GDP grew 0.2% month-on-month in March, following a 0.5% rise in February and the services output grew 0.4% month-on-month.

Construction output grew 0.5% month-on-month whilst production fell 0.7% month-on-month and GDP expanded by 0.7% in the first quarter of the year.

Isaac Stell, Investment Manager at Wealth Club said, “With the winds of tariff turmoil whipping up economic seas, today’s better than expected GDP figures for the UK show an economy that has so far been able to navigate itself to calmer waters.

Output grew during the month across two of the three major sectors, with the economic engine, the services sector growing by 0.4%. Construction saw solid progress whilst production slipped due to falls in the manufacturing sector. UK GDP grew at a faster rate of knots during the first quarter and its fastest rate in three quarters. Impressive, albeit backward looking.

It could be easy to get carried away by today’s positive surprise, but the winds of tariff turmoil are yet to be fully appreciated in the figures. It was only a few days after the quarter end that the ‘Liberation Day’ tariffs were announced and the impact from the tariff induced storm will likely have pitched the economy onto a different path, at least in the short term.

Navigating back to port is likely only to get harder in the coming months due to the higher living wage and national insurance rises that came into effect in April, coupled with the tariff turmoil, this could make for a bumpy economic ride for the rest of the year.”

Policy Chair of the Federation of Small Businesses (FSB), Tina McKenzie, said, “While today’s figures are a tentative step in the right direction, this is still far from sustainable economic growth and certainly no cause for complacency.

“With official figures this week estimating the number of payrolled employees down more than 100,000 over the last year, there are clear signs that the increased costs and risks of giving someone a job are having an impact – threatening to snuff out these first flickers of growth.

“The Government must improve the parts of its Employment Rights Bill which risk killing job opportunities. Without changes, putting people off hiring will be a significant barrier to growth – and will cause many small employers to freeze their growth ambitions or even downsize.

“Our latest quarterly Small Business Index, covering the three months to the end of March, found only eight per cent of small businesses had increased staff numbers over the quarter, while more than double that – 21 per cent – had to reduce their workforce.

“Today’s GDP figures should also be seen in the context that they cover the period just before tax rises kicked in at the start of the new financial year. It was also a period in which there were signs of small exporters pulling forward activity ahead of the threat of tariffs on exports to the U.S.

“There should be no let-up in the quest for sustainable growth, and policy barriers which risk blocking it should be removed.”