UK economy grows 0.7% in first quarter, but bounce expected to be short-lived
The U.K. economy grew 0.7% in the first quarter of 2025, according to a preliminary estimate from the U.K.’s Office for National Statistics released on Thursday.
Economists polled by Reuters had expected the country’s gross domestic product (GDP) to expand by 0.6% over the period, up from the 0.1% and zero growth in the fourth and third quarters, respectively.
The ONS said first-quarter growth “was driven by an increase of 0.7% in the services sector, production also grew, by 1.1%, while the construction sector showed no growth.”
Deutsche Bank Economist Sanjay Raja said this week that any first quarter jump is likely to be short-lived.
“By all accounts, a surprisingly stronger end to 2024 combined with some strength in domestic spending and front-running of trade ahead of Liberation Day, will have led to a bigger jump to start the year,” he said in a research note. Deutsche Bank believes “risks are skewed higher,” however.
“The bump higher in activity will likely be short lived, however. We expect GDP growth to reverse in the second quarter of 2025, before slowly edging higher through the course of the year – and eventually returning to its trend growth rate in early 2026,” he said.
– Holly Ellyatt
How are markets in Asia and the U.S. looking?
Here’s a quick update on market action in Asia and the U.S. overnight from our teams in Singapore and New York.
Asia-Pacific markets mostly fell overnight, after mostly gaining in the previous session on easing U.S.-China trade tensions. Japan’s benchmark Nikkei 225 fell 0.90%, while the Topix lost 0.75%. South Korea’s Kospi declined 0.29%, while the small-cap Kosdaq slipped 0.37%.
In the United States, S&P 500 futures slipped in overnight trading after the broad market index strung together a third consecutive advance in reaction to the Trump administration and China hammering out a temporary suspension of their tit-for-tat tariff dispute.
Futures tied to the S&P 500 were down 0.2%, while Nasdaq-100 futures lost about 0.1%. Dow Jones Industrial Average futures fell 173 points, or 0.4%.
U.S. traders will be keeping an eye on producer price index data, retail sales and industrial production numbers for April that will be released before the stock market opens.
— Holly Ellyatt, Lee Ying Shan and Scott Schnipper
European markets: Here are the opening calls
Good morning from London, here are the opening calls for today.
European bourses are expected to open in flat to lower territory on Thursday as markets struggle to regain momentum after snapping a four-session winning streak.
Futures point to Germany’s DAX, the French CAC 40 and Italian FTSE MIB all opening around 0.16% lower, while the FTSE 100 is expected to open slightly higher.
Traders will be keeping an eye on earnings from Deutsche Telekom, Siemens, Allianz and Alibaba. Data releases in focus include the latest U.K. gross domestic product data, with preliminary first-quarter data out today.
— Holly Ellyatt
