UK economy grows by faster-than-expected 0.7% in first quarter: Live updates

The U.K.’s robust and better-than-expected economic performance will be cheered by the country’s leadership in Downing Street, but economists say to enjoy the moment while it lasts, as growth will likely moderate later this year.

Here’s a snapshot of what economists are saying:

Economists also suggest that the surge in GDP is due to temporary tariff and tax influences, not better fundamentals.

— Holly Ellyatt

The U.K.’s better-than-expected economic growth of 0.7% in the first quarter (compared to the fourth quarter which saw a lackluster 0.1% expansion) will be a relief for the British Chancellor Rachel Reeves.

“Today’s growth figures show the strength and potential of the UK economy,” she said in emailed comments. “In the first three months of the year, the U.K. economy has grown faster than the U.S., Canada, France, Italy and Germany,” she added.

Reeves and the Labour government have been under pressure to kickstart growth after several months of sluggish economic performance. Reeves is making the most of a rare bit of positive data this morning, remarking:

“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,” Reeves said.

— Holly Ellyatt

CNBC’s Steve Sedgwick, Karen Tso and Juliana Tatelbaum digest the latest U.K. GDP figures, as well as recent comments by Bank of England policymakers on the state of the country’s economy.

— Katrina Bishop

Industrial technology company Siemens AG has left its financial outlook for the year unchanged despite “increased uncertainty in the economic environment,” while reporting its second-quarter results.

The company reported total sales of 19.8 billion euros ($22.19 billion), beating analyst expectations of 19.2 billion euros. Siemens also hauled in 2.4 billion euros in net profit, beating a forecast of 1.85 billion euros.

“Largely inline report, with an unchanged [financial year] guide, and overall no big changes to the equity story – even if there are a few moving parts,” said RBC Capital Markets analyst Mark Fielding in a note to clients. “We do note recent share price strength could create some short term downside risk.”

Siemens AG shares have risen 19% so far this year.

— Ganesh Rao

German pharmaceutical company Merck KGaA cut its full-year outlook on Thursday amid macroeconomic and geopolitical uncertainty and foreign-exchange headwinds.

The company forecast earnings before interest, tax, depreciation and amortization (EBITDA), adjusted for one-off items, of around 5.8 billion euros ($6.5 billion) to 6.4 billion in 2025. That’s below the 6.1 billion euros to 6.6 billion euros forecast in February.

“Against the backdrop of the ongoing highly dynamic development of macroeconomic, geopolitical and industry specific conditions, for example due to decisions of the U.S. administration, the forecast is subject to a high degree of uncertainty and volatility in fiscal 2025,” the company wrote in a statement.

In particular, it said that uncertainty is centered on the “volatility and effects of U.S. tariff policy” and potential countermeasures, adding that the company is “carefully observing corresponding developments and is evaluating potential scenarios and countermeasures.”

— Karen Gilchrist

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

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

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