The UK economy beat economists’ predictions to grow by 0.7% in the first three months of the year, according to the Office for National Statistics.

Gross domestic product (GDP) is an indication of how the economy is performing. Higher figures point to higher growth, while lower/falling figures can signal a potential recession.

In the final quarter of 2024, the economy grew by a very sluggish 0.1%, and economists predicted a 0.6% increase so far this year, so the significant rise will be welcome news for the chancellor – particularly as the UK outpaced all of its G7 peers.

The figures this time around were bolstered by the services sector, which is significant as businesses have repeatedly warned that Rachel Reeves’ tax policies announced in last year’s Autumn Budget, such as a rise in employer national insurance contributions, would hit growth and cost jobs in the sector.

However, it’s not all good news. These figures are reflective of the period before the US implemented sweeping trade tariffs, which are expected to knock GDP and have resulted in worldwide turmoil.

The impact of the tariffs could be felt down the line and will show up in the next round of statistics.

The UK’s prime minister, Keir Starmer, recently agreed a new tariff deal with Donald Trump to help mitigate this impact. Some of the key changes include reducing car export tariffs from 27.5% to 10%, while the 25% steel tariff was scrapped.