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Business investment in the UK rebounded sharply in Q1 2025, rising 5.9% quarter-over-quarter, far exceeding expectations of 0.4% and recovering strongly from a -1.9% decline in Q4 2024. On an annual basis, investment jumped 8.1%, a significant acceleration from the 1.8% growth recorded a year earlier. The figures reflect renewed business confidence and a potential shift toward expansion and capital expenditure.

The UK economy showed solid momentum in early 2025. GDP rose 0.2% MoM in March, ahead of expectations (0.0%), though slower than February’s 0.5%. Quarterly GDP growth reached 0.7% in Q1, topping forecasts of 0.6% and a significant improvement from 0.1% in Q4 2024. On an annual basis, GDP expanded 1.3% in Q1 and 1.1% YoY in March, both slightly above expectations. The 3-month moving average for GDP held steady at 0.7%, reflecting consistent growth.

In trade, the overall trade deficit narrowed to £19.87B in March, improving from the prior £20.96B but wider than the forecasted £19.10B. The non-EU trade deficit also improved to £6.83B, compared to the previous £8.85B.

On May 14, 2025, the Office for National Statistics reported that average earnings excluding bonuses rose 5.6% year-on-year in March, slightly below the 5.7% forecast and down from February’s 5.9%. Including bonuses, pay growth was 5.5%, above expectations of 5.2% but below February’s 5.7%. Claimant unemployment increased by 5.2 thousand in April—well under the 22.3 thousand forecast and reversing March’s 16.9 thousand decline. Over the three months to March, employment rose by 112 thousand, short of the 120 thousand expected and down from 206 thousand in the prior period. The unemployment rate ticked up to 4.5% in March, matching forecasts and up from 4.4%.

On May 13, 2025, the British Retail Consortium (BRC) reported that its Retail Sales Monitor showed a 6.8% year-on-year rise in April, far outpacing forecasts of 2.4% and accelerating from March’s 0.9% gain, indicating strong consumer demand in the UK retail sector.

On May 7, 2025, S&P Global reported the UK Construction PMI for April at 46.6, beating expectations of 46.0 and rising from March’s 46.4. Despite the uptick, the reading remains below the 50-point threshold, indicating that construction activity continues to contract, albeit at a slightly slower pace.

The S&P Global Services PMI for the UK fell sharply to 49.0 in April from 52.5 in March, slipping into contraction territory but still performing better than market expectations. The Composite PMI also declined to 48.5 from 51.5, highlighting broader weakness in both services and manufacturing sectors.

UK mortgage approvals came in at 64.31K in March, slightly above expectations of 64.00K but down from 65.09K in February, reflecting stable buyer activity. However, mortgage lending surged to £12.96 billion, a sharp increase from £3.30 billion the previous month and far above the forecast of £3.80 billion. The figures suggest a significant rise in loan values, possibly driven by higher property prices or refinancing activity.

The S&P Global Manufacturing PMI for the UK rose to 45.4 in April, up from 44.9 in March and above the forecast of 44.0. While this marks the strongest reading in five months, it remains below the 50 threshold, indicating that the manufacturing sector is still contracting, though at a slower pace. The data suggests tentative signs of stabilization amid persistent cost pressures and weak demand.

UK consumer credit slowed to £0.875 billion in March, below expectations of £1.2 billion and sharply down from £1.307 billion in February, reflecting weaker demand for short-term borrowing. However, net lending to individuals surged to £13.8 billion, driven largely by mortgage activity, far above the forecast of £4.4 billion.

Meanwhile, the M4 money supply rose by 0.3% MoM, slightly above expectations, while the broader M3 stock reached £3,129.5 billion, continuing its steady expansion.

The Nationwide House Price Index showed a monthly decline of -0.6% in April, a sharper drop than the expected -0.1%, following flat growth in March. On a yearly basis, house prices rose by 3.4%, down from 3.9% in March and below the 4.1% forecast. The data suggests that the UK housing market is losing momentum amid high mortgage rates and affordability pressures.

UK retail sales surprised to the upside in March, signaling resilient consumer demand despite lingering economic pressures. Core Retail Sales (MoM) rose 0.5%, beating expectations of a -0.4% decline, while the YoY figure jumped to 3.3%, up from 1.8%. Including fuel, retail sales (MoM) increased by 0.4%, and YoY growth hit 2.6%, both outperforming forecasts. The data suggests improving momentum in consumer spending, which could ease recession concerns and complicate the Bank of England's rate cut path.

The GfK Consumer Confidence Index fell to -23 in April, down from -19 in March and missing expectations of -21. This marks a setback in sentiment, reflecting increased concerns over inflation, household finances, and economic stability ahead of upcoming political and economic events.