Chancellor responds to Q1 2025 GDP statistics + other reactions

GDP first quarterly estimate, UK: January to March 2025

Chancellor of the Exchequer Rachel Reeves 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.”

Conservative response to GDP figures

Mel Stride MP, Shadow Chancellor of the Exchequer, said:

“While it's welcome the economy is growing, both the OBR and IMF have downgraded the UK's growth.

“Labour inherited the fastest-growing economy in the G7, but their decisions have put that progress at risk. Labour's Jobs Tax, unemployment Bill and reckless choices have seen the number unemployed rise by 10 per cent and working families £3,500 worse off.

“Only the Conservatives believe in low tax, free-enterprise and less regulation, giving business the conditions to create good well paid jobs and wealth in our economy.”

ENDS

Notes to Editors:

Labour promised the highest growing economy in the G7 and said growth was ‘their number one mission': 

• Keir Starmer said he was ‘determined' to ensure the UK is the highest growing economy in the G7. STARMER: ‘I am determined to do everything in my power to galvanise growth, determined for this country to be the highest growing economy in the G7'.^[1]

• Rachel Reeves said the government's number one mission is to grow the economy. REEVES: ‘This new government has come in with a determination, a number one mission to grow the economy'.^[2]

• Rachel Reeves said Labour will bring about the ‘most pro-growth, the most pro-business Treasury that this country has ever seen'. REEVES: ‘This is going to be the most pro-growth, the most pro-business Treasury that this country has ever seen'.^[3]

• Darren Jones said economic growth is a metric on which the public can hold Labour accountable. JONES: ‘Well, look, we are clear in our plan for change around timelines. All of them, including our economic growth targets, have dates attached to them. And the key metric that we've said that we're going to be held accountable for is that people should have more money in their pockets'.^[4]

However, Labour are killing growth stone dead:

• Labour have introduced a National Insurance Jobs Tax, costing businesses £900 per employee. Labour have increased employer National Insurance contributions, clearly breaking commitments made throughout their general election campaign and their manifesto through their Jobs Tax that will increase the cost of employment by £900 for the average worker.^[5]

• Labour have halved business rates relief for Retail, Hospitality and Leisure, more than doubling the business rates of eligible businesses. Labour have cut RHL relief from 75 per cent to 40 per cent, increasing rates for eligible businesses by 140 per cent.^[6]

• Labour have reduced Agricultural Property Relief (APR) and Business Property Relief (BPR), introducing a Family Farm Tax and making it more expensive to pass on a family-owned business. APR and BPR have been capped at the first £1 million of assets, meaning 520 farms will face inheritance tax for the first time and small family businesses that own their premises such as bakers, barbers and butchers will face costs for passing on their business.^[7]

• Labour's Plan to Make Work Pay will burden businesses with over 70 radical 1970s-style regulations, imposing £4.5 billion of additional costs on businesses.Labour's Plan to Make Work Pay will put over 70 new French-style regulations or requirements on businesses – at a cost to business of £4.5 billion a year.^[8]

Responding to Labour's economic mismanagement, the Office for Budget Responsibility (OBR), the International Monetary Fund (IMF), and the Bank of England have all downgraded their growth forecasts:

• The OBR halved its growth forecast for 2025. In the March 2025 Economic and Fiscal Outlook, the OBR cut its 2025 growth forecast in half, lowering it from two percent to one percent.^[9]

• The IMF has downgraded the UK's growth projection for both this year and next, citing ‘domestic factors'. The UK's growth projection has been downgraded by -0.5 percentage points in 2025 and -0.1 percentage points in 2026 – putting the UK's growth projections at 1.1 per cent for 2025 and 1.4 per cent for 2026. Pierre-Olivier Gourinchas, Director of the Research Department at the IMF, cited ‘domestic factors' for the downgrading of growth in the UK.^[10]

• The Bank of England's Monetary Policy Report reduced growth forecasts for 2026 and 2027. The Bank of England reduced growth forecasts for 2026 and 2027. They also said growth has slowed since the middle of 2024 – just as Labour came into office.^[11]

^[1] International Investment Summit Speech, 14 October 2024, archived.

² Sky News Pool Clip, 16 January 2025, archived.  

³ CNBC, 29 July 2024, archived. 

⁴ BBC Radio 4, Today, 15 January 2025, archived. 

⁵ IFS, Autumn Budget 2024, 31 October 2024, link.

⁶ HMT, Autumn Budget 2024, 30 October 2024, link; Conservative Research Department Analysis, 11 November 2024, available on request.

⁷ HMT, Autumn Budget 2024, 30 October 2024, link.

⁸ The Labour Party, Plan to Make Work Pay, 24 May 2024, link; The Daily Telegraph, 24 May 2024, link; DBT, Employment Rights Bill, October 2024, link; Electoral Commission, 11 November 2024, link.

⁹ OBR, Economic and Fiscal Outlook, 26 March 2025, link.

¹⁰ IMF, World Economic Outlook, April 2025, 22 April 2025; IMF, Transcript of the World Economic Outlook, April 2025 Press Briefing, 22 April 2025, link.

¹¹ Bank of England, Monetary Policy Report, 8 May 2025, link.

[1] International Investment Summit Speech, 14 October 2024, archived.

[2] Sky News Pool Clip, 16 January 2025, archived.  

[3] CNBC, 29 July 2024, archived. 

[4] BBC Radio 4, Today, 15 January 2025, archived. 

[5] IFS, Autumn Budget 2024, 31 October 2024, link.

[6] HMT, Autumn Budget 2024, 30 October 2024, link; Conservative Research Department Analysis, 11 November 2024, available on request.

[7] HMT, Autumn Budget 2024, 30 October 2024, link.

[8] The Labour Party, Plan to Make Work Pay, 24 May 2024, link; The Daily Telegraph, 24 May 2024, link; DBT, Employment Rights Bill, October 2024, link; Electoral Commission, 11 November 2024, link.

[9] OBR, Economic and Fiscal Outlook, 26 March 2025, link.

[10] IMF, World Economic Outlook, April 2025, 22 April 2025; IMF, Transcript of the World Economic Outlook, April 2025 Press Briefing, 22 April 2025, link.

[11] Bank of England, Monetary Policy Report, 8 May 2025, link.

Beneath the froth in quarterly GDP figures lies a persistent decline in living standards - JRF

Responding to the latest quarterly GDP figures, Alfie Stirling, Director of Insight and Policy at JRF, says:

"The real test for the government's growth mission is whether the UK economy is delivering greater financial security for families. But beneath the froth of quarterly GDP figures the government risks presiding over the first parliament on modern record to see a fall in living standards from start to finish, with the poorest suffering worst of all.  

"As the Chancellor has pointed out herself, families experience the economy not in terms of percentage points of GDP but by the pounds in their pockets. A parliamentary term that ends with families worse off than when it started will prove a difficult record to defend at the ballot box, with this month's local elections offering an early indication.

"Reversing the dire outlook for families requires an immediate and concerted shift in strategy from government. Direct and targeted improvements in family living standards must move to the centre of the plan for growth. Neither families, or the government, can afford to wait."

British taxpayers no longer suffering personal recession, say TaxPayers' Alliance

After two consecutive quarters of negative GDP per capita growth, British taxpayers are finally out of a personal recession with the latest figures from the Office for National Statistics (ONS) showing that living standards are finally increasing. In January to March 2025, GDP per capita increased by 0.5 per cent and overall GDP increased by 0.7 per cent.

The TaxPayers' Alliance first declared a personal recession in February 2025 when figures from the ONS confirmed that despite overall GDP growth in October to December 2024, GDP per capita had fallen by 0.1 per cent in October to December and 0.3 per cent in July to September 2024. Analysis by the group found that this was the third “personal recession” over the last decade, with two previous personal recessions in 2020 and 2023-24.

The TPA are calling for GDP per capita to be placed at least at parity with overall GDP figures in government policy-making and are calling for a specific policy response to limit the burden on taxpayers during personal recessions, including:

1. Limits on benefit increases
2. Departmental spending reviews 
3. A visa category review focusing on increasing the proportion of high skilled immigrants as a percentage of overall immigration
4. Public sector pay freeze
   
   

​​Change in UK quarterly GDP and GDP per capita, Q3 2024 to Q1 2025 (%)

Commenting, John O'Connell, chief executive of the TaxPayers' Alliance, said:

“It's undeniably good news that British taxpayers are no longer mired in the misery of a personal recession.

“Until now, headline figures showing economic growth were largely meaningless to the millions of households suffering from declining living standards combined with a record high tax burden. Even today, overall growth is healthier than GDP per capita growth.

“The Treasury should use this as an opportunity to start prioritising GDP per capita over overall GDP, particularly given the Labour government's newfound desire to bring down immigration.”

Growth “proof that a serious, long-term approach to public finances works”, says IPPR 

Reacting to today's growth estimates, Pranesh Narayanan, research fellow at IPPR, said: 

“While growth in the UK economy is picking up, the US is heading in the opposite direction – this is proof that a serious, long-term approach to public finances works. 

“Increased global economic insecurity, tariffs and trade wars will make it difficult to sustain this momentum. But if the government uses the imminent industrial strategy to provide clarity, consistency and certainty to businesses, they will be able to drive investment in future-facing industries like clean manufacturing and digital services, which will be core to the UK's future growth prospects. 

“Crucially, the Chancellor needs to use the benefits of growth to provide funding and support for the schools, hospitals and local councils that we all rely on.” 

TUC: GDP boost is welcome – but more to do to push for stronger growth

Commenting on today's (Thursday) ONS figures showing quarterly GDP growing by 0.7% in Q1 2025 compared to the previous quarter, and 0.2% in March 2025, TUC General Secretary Paul Nowak said:  

“It is good news for workers and businesses that GDP improved earlier this year.  

“The job of securing strong future growth is far from over.   

"A fully funded industrial strategy – one that delivers good jobs across the country – is key for ongoing progress.     

“And it is vital that everyone keeps playing their part.  

"The Bank of England should accelerate cutting interest rates as a matter of priority, boosting confidence and helping businesses and families to spend and invest.”