IoD press release Strong first quarter leaves UK well-placed to weather global storm

“The first quarter of 2025 saw the strongest growth in a year with the expansion reassuringly broad-based growth driven by 10 of the 14 subsectors in services and 10 of 13 subsectors in manufacturing. Some of the prevailing trends reported to the ONS nonetheless suggest some one-off factors supporting the economy in March: new car registrations and housing market activity ahead of the April rise in stamp duty were noted to the ONS by respondents to the surveys. And we are reminded of the turbulence to come in April elsewhere in the data: gold and precious metal prices are also noted to have spurred activity – these are items which have benefitted from search-for-safety flows as investors look to insulate themselves from US risks. All in all, it is no bad thing that the UK seems to have entered the April turmoil in good economic shape.”

“UK growth seems unlikely to maintain its Q1 strength over the rest of this year. Tariff turmoil and its impacts on consumer and investment spending will push down on activity in coming months as it delays decision-making and increases the desire for precautionary saving buffers. While consumer spending should continue to be supported by real earnings growth and further falls in interest rates, the labour market is softening rapidly amidst significant increases in employment costs. The sharp rise in uncertainty pushes down further on investment appetite among businesses already seeing profits pressured by rising costs. But amidst the noise, there are a number of notable policies expected from the UK government in the coming weeks: industrial strategy and the 10 year infrastructure plan provide opportunities to cut through and enable businesses to see a sense of direction for the UK economy.”