Rachel Reeves says the UK economy “starts turning”

The Prime Minister said the UK economy is “starting a turn” as it grew more than expected in the first three months of the year.

Rachel Reeves told the BBC that the 0.7% increase between January and March was “very encouraging”, but Shadow Secretary Mel Stride said it was “it was too early for those who popped the champagne cork”.

The growth figure is stronger than the forecast of 0.6%, and is helped by consumer spending and business investment.

The figures mark a period before the U.S. imposes import tariffs and UK employer taxes increased in April, with analysts warning that strong growth rates are unlikely to continue.

The Labor government raised the economy to a top priority when it came to power last year, but its decision to increase employer's National Insurance (NI) contributions has been criticized by many businesses, who said it could reach growth.

U.S. import tariffs are expected to reach growth, and the International Monetary Fund has recently lowered its forecasts for the global economy and the UK.

But Reeves told the BBC: “We will be the fastest-growing economy in the first three months of this year.

“We have more work to do,” she added. “I absolutely understand that for many families, the cost of living crisis is still real, but today’s numbers do indicate that the economy is starting to turn.”

Mel Stride criticized the increase in NI payments by employers, calling it a “employment tax.”

“Labor has inherited the fastest-growing economy in the G7, but their decision puts this progress at risk,” he said.

Daisy Cooper, spokesman for the Liberal Democratic Treasury Department, said the data was “positive news” but “no time to be complacent.”

“We haven't seen the impact of taxes on growth in April on Rachel Reeves, which is not pretty,” said MP Richard Tice, deputy leader in reforming Britain.

The Office for National Statistics (ONS) said the UK's major service industries – businesses covering areas such as retail, hospitality and finance – were the biggest drivers of growth in the first three months of a year.

But analysts warn that growth is expected to slow in the coming months, while Paul Dales said the latest figures are “probably as good as they were back then.”

He said strong GDP growth was “not likely to repeat, as much of it was due to the advance tariffs raised by activities and increased domestic corporate taxes.”

Mr Dales noted that in three consecutive quarters, exports increased by 3.5% in the first three months of the year.

But Liz Martins, a senior British economist at HSBC, told the BBC Today show that she was “happy” with the characters.

“Business investment has increased nearly 6% from the quarter, and the service industry has performed well.

“So it’s not just manufacturers that sell to the U.S. to raise tariffs.”

Annabel Thomas, CEO of Scotland-based NC'Nean Whiskey Distillery, said she was “quite confident” in the UK’s prospects.

She said interest rates in the UK are expected to drop further this year, “this really affects people’s funds in their pockets.”

The business is growing in the United States, so it is decided to “absorb tariffs and keep our prices stable in the United States”.

John Inglis is the founder of Exactaform, a manufacturer of Diamond tools, which employs 100 people and owns a factory in the United States. He said it has become very difficult to make decisions about the future of the business.

“We're about taxes. We don't know which way we're going to take – the 10% advantage of profit is a lot.”

He said they were reluctant to transfer production to the United States because they “revealed those who are very loyal to us to us.”

As for the rise of employer NI, he said he doesn't mind “involving the extra…but it's all about working on you because you need to expand the profit you need”.

“We are opening fires (decision-making) because if you make the wrong decision now, everyone is out of work.”

Last week, the Bank of England lowered UK interest rates from 4.5% to 4.25%, and hinted that more cuts could occur in the coming months.

However, the growth figures that exceeded expectations have eased the market's perception of further declines this year.

Analysts believe the reduction may be less than previously expected and affects so-called swap rates, which greatly affects fixed-rate mortgage pricing.

Despite the high volatility of forecasts, mortgage rates may now be backed up. TSB said it would raise its interest rates on Friday.