UK GDP Growth Holds at 0.7% in Q1 2025, Services and Manufacturing Lead Gains

• UK gross domestic product (GDP) is estimated to have grown by 0.7% in Quarter 1 (Jan to Mar) 2025, unrevised from the first estimate.
• In output terms, growth in Quarter 1 2025 was driven by an increase of 0.7% in the services sector, production also grew, by 1.3%, and the construction sector grew by 0.3%.
• In expenditure terms, growth in the latest quarter was driven by increases in gross fixed capital formation, net trade and household consumption.
• Nominal GDP is estimated to have increased by 1.5% in Quarter 1 2025, mainly driven by an increase in compensation of employees.
• Real GDP per head is estimated to have grown by 0.6% in Quarter 1 2025, revised up from the first estimate increase of 0.5%.
• Real household disposable income (RHDI) per head is estimated to have decreased in the latest quarter by 1.0% from a revised 1.8% increase in the previous quarter.
• The household saving ratio is estimated to have decreased by 1.1 percentage points to 10.9% this quarter; driven by a fall in the non-pension savings contributions.

UK real gross domestic product (GDP) is estimated to have increased by 0.7% in Quarter 1 (Jan to Mar) 2025, unrevised from the first estimate (Figure 1). Real GDP is estimated to have increased by an unrevised 1.3%, compared with the same quarter a year ago.

Looking at our more timely monthly estimates, GDP was estimated to have fallen by 0.3% in April 2025, largely because of a decline in services output.

Early estimates of GDP are subject to revision (positive or negative). Previous analysis shows that the revision between the first quarterly GDP estimate, and the same quarterly estimate three years later is typically up to plus or minus 0.2 percentage points, when more detailed information becomes available through the comprehensive annual supply and use balancing process, as the data content increases.

Output is estimated to have increased by an unrevised 0.7% in Quarter 1 (Jan to Mar) 2025, following 0.1% growth in the previous quarter. Overall, there has been widespread growth in the latest quarter, with 14 out of 20 of the subsectors increasing, unrevised from the first estimate.

The services sector increased by 0.7% in the latest quarter. Construction output increased by 0.3% (revised up from no growth), while production increased by 1.3% (revised up from 1.1%).

Services

Services output increased by 0.7% in the latest quarter, unrevised from the first estimate. Services output is estimated to have increased by 1.4%, compared with the same quarter a year ago. Non-consumer-facing services (business-facing services) increased by 0.6% in Quarter 1 2025 (revised down from 0.7% growth), while consumer-facing services increased by 0.8% (revised down from 0.9% growth).

Figure 3 shows 9 of the 14 services sectors contributed positively to growth. The largest positive contributor to growth was administrative and support service activities, which increased by 3.7%. Within this subsector, all 6 industries contributed positively to growth, the largest contributor being services to buildings and landscape activities, which grew by 9.8%.

The second largest positive contribution to growth was wholesale and retail trade; repair of motor vehicles and motorcycles, which increased by 1.6%. Within this subsector, all three industries contributed to growth.

The largest negative contributor to growth in Quarter 1 2025 was financial and insurance activities, which fell by 0.7%. This was largely driven by a 1.5% decline in financial service activities, except insurance and pension funding.

Production

The production sector is estimated to have grown by 1.3% in Quarter 1 2025, revised up from a first estimate growth of 1.1%, following falls in the previous three quarters. Production output is estimated to have shown no growth compared with the same quarter a year ago.

The growth in production in Quarter 1 2025 was largely driven by a 1.1% increase in manufacturing and a 4.0% increase in water supply: sewerage, waste management and remediation activities. Elsewhere, electricity, gas, steam and air conditioning supply increased by 2.5%, while mining and quarrying fell by 0.5%.

Manufacturing output grew by 1.1% in Quarter 1 2025 (revised up from a 0.8% growth), following a 0.6% fall in the previous quarter. Figure 4 shows there were increases in 10 out of 13 manufacturing subsectors in the latest quarter. The largest positive contributions were from the manufacture of transport equipment (which grew by 2.8%) and the manufacture of machinery and equipment n.e.c. (which grew by 4.0%). The growth in transport equipment was largely driven by manufacture of motor vehicles, trailers and semi-trailers, although this industry remains 5.5% below its level a year ago.

Revisions to total production are mainly because of upward revisions in the manufacturing subsector, in particular:

• late and updated Monthly Business Survey returns, most notably in the manufacture of basic pharmaceuticals products and pharmaceutical preparations industry
• other updated source data, most notably in the manufacture of basic metals and metal products

Construction

Construction output is estimated to have grown by 0.3% in Quarter 1 2025, revised up from no change, following 0.3% growth in the previous quarter. The level of construction output is now 1.2% higher in Quarter 1 2025 compared with the same quarter a year ago, revised up from 0.9%.

Looking at the expenditure approach to measuring gross domestic product (GDP), growth in the latest quarter was driven by increases in gross fixed capital formation, net trade and household consumption

Household consumption

There was an increase of 0.4% in real household expenditure in Quarter 1 (Jan to Mar) 2025, revised up from the first estimate increase of 0.2%. Real household expenditure is now 0.9% higher compared with the same quarter a year ago. Within household consumption, growth was driven by housing, household goods and services, and transport.

Net tourism contributed positively to growth in household consumption in the latest quarter. Net tourism is offset within trade, so there is no impact on the GDP aggregate. Information on how we measure net tourism is provided in our National Accounts articles: Treatment of tourism in the UK National Accounts article. Excluding net tourism, domestic consumption grew by 0.3% in the latest quarter.

The upward revision in household consumption reflects updated source data on recreation and transport spending, as well as upward revisions to net tourism.

Consumption of government goods and services

Real government consumption expenditure fell by 0.4% in the latest quarter, revised up from the first estimate fall of 0.5%. Real government consumption is 1.5% higher, compared with the same quarter a year ago. The fall in government consumption in the latest quarter mainly reflects lower expenditure on health and education.

Gross capital formation

Within gross capital formation, revised estimates of gross fixed capital formation (GFCF) showed a 2.0% increase in Quarter 1 2025, revised down from the first estimate increase of 2.9%. GFCF is now up 3.5% compared with the same quarter a year ago. The increase in the latest quarter was mainly driven by a large increase in transport (mainly because of relative strength in aircraft investment), as well as increases in ICT equipment and other machinery and equipment.

Within GFCF, business investment is estimated to have increased by 3.9% in Quarter 1 2025, revised down from the first estimate increase of 5.9%. Downward revisions in GFCF and business investment reflect revised survey data, in particular in other machinery and equipment, and other buildings and structures.

Excluding the alignment adjustments, revised estimates show that real inventories increased by £7 billion in Quarter 1 2025 (Table 2). This was driven by higher stocks in manufacturing, specifically work in progress, and material, stores and fuel inventories.

Net trade

The UK’s trade deficit for goods and services was 1.7% of nominal GDP in Quarter 1 2025. However, this includes non-monetary gold and other precious metals, which is an erratic series. It can be useful to exclude this from the trade balance. Excluding non-monetary gold and other precious metals, the trade deficit was 1.0% of nominal GDP in Quarter 1 2025

Export volumes increased by a revised 3.3% (previously a 3.5% increase), following three consecutive quarterly declines. The increase in the latest quarter was mainly driven by a 5.7% increase in goods exports and a 1.5% increase in services exports. The increase in goods exports was mainly caused by rises in exports of material manufactures, whereas growth in services exports was caused by rises in other business services and travel.

Import volumes increased by a revised 2.0% in the latest quarter (previously a 2.1% increase), driven by increases of 0.3% and 5.4% in goods and services imports, respectively. The increase in goods imports was driven by large movements in non-monetary gold and other precious metals. However, this series also appears within gross capital formation (GCF) as valuables, so the effect is GDP neutral. The increase in services imports were caused by increases in other business services and travel.

Nominal gross domestic product (GDP) grew by 1.5% in Quarter 1 (Jan to Mar) 2025 (previously a 1.6% increase) and is up 5.7% compared with the same quarter a year ago. Growth in nominal GDP was mainly driven by increases in compensation of employees