The UK economy is “beginning to turn a corner”, the chancellor has said, after it grew by more than expected in the first three months of the year.
Rachel Reeves told the BBC the 0.7% growth in the January-to-March period was “very encouraging”, but shadow chancellor Mel Stride said it was “a bit premature to be popping the champagne corks”.
The growth figure was stronger than the 0.6% that had been forecast, and was helped by increases in consumer spending and business investment.
The figures mark the period just before the US imposed import tariffs and UK employer taxes increased in April, and analysts warned the strong rate of growth was unlikely to continue.
The Labour government made boosting the economy its top priority when it came to power last year, but its decision to increase employers’ National Insurance (NI) contributions was criticised by many businesses who said it could hit growth.
The US import tariffs are also expected to hit growth, with the International Monetary Fund recently downgrading its forecasts for the global economy and UK.
But Reeves told the BBC: “We are set to be the fastest growing economy in the G7 in the first three months of this year.
“We still have more to do,” she added. “I absolutely understand that the cost of living crisis is still real for many families, but the numbers today do show that the economy is beginning to turn a corner.”
Mel Stride criticised the rise in employers’ NI payments, calling it a “jobs tax”.
“Labour inherited the fastest-growing economy in the G7, but their decisions have put that progress at risk,” he said.
Liberal Democrat Treasury spokesperson Daisy Cooper said the data was “positive news”, but there was “no time for complacency”.
Reform UK deputy leader Richard Tice MP said: “We are yet to see the impact of Rachel Reeves’ April tax rises on growth, it won’t be pretty.”