UK GDP grew by 0.7% in Q1 2025, outpacing expectations and sparking cautious optimism about economic recovery.

The faster-than-expected growth was driven primarily by a robust performance in the services sector—particularly retail, hospitality, and finance—as well as a sharp rise in business investment and a 3.5% rebound in exports. Firms also front-loaded activity ahead of anticipated US tariffs and an April rise in employers’ National Insurance contributions, temporarily boosting output. Consumer spending remained resilient, aided by easing inflation and a recent interest rate cut, which improved household disposable income. However, economists warn that these gains may not be sustained in subsequent quarters.

Rachel Reeves says UK economy 'beginning to turn a corner' - BBC News

1. Explain why some economists believe the growth rate in Q1 was faster than expected because of ‘front-loaded activity.’

2. Discuss how a 'sharp rise in business investment' could lead to economic growth in the UK.

3. Discuss the factors influencing consumer spending in the UK so far this year.