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Reeves: GDP data confirms effective economic strategy

Chancellor Rachel Reeves has good reason to highlight her achievements today, following stronger-than-expected UK economic expansion in March.

With GDP up 0.3% in March and 0.6% for the first quarter, Reeves commented:

Today's robust growth numbers demonstrate that the government is pursuing the correct economic approach.
The decisions I have taken as chancellor have positioned our economy more strongly to manage the expenses from the Iran conflict.
This is not the moment to jeopardize our economic steadiness.

The final remark appears directed at party members attempting to oust Prime Minister Keir Starmer from office (potentially affecting the chancellor's role as well...)

Key events

13m ago Aviva CEO: firms require political steadiness
40m ago Reeves cautions against driving UK into chaos via leadership fight
54m ago Rachel Reeves regarded as key stabilizer for market confidence
1h ago ONS: Indications of slight softening in April
1h ago UK gilt yields ease at market open
2h ago Analysts: Q1 expansion could represent 2026 peak
2h ago Computer programming and advertising show solid Q1 gains
2h ago Reeves: GDP data affirms right economic strategy
2h ago Construction industry rebounds sharply in March
2h ago UK Q1 growth climbs to 0.6%
2h ago UK economy surpasses predictions with March expansion
3h ago England and Wales housing market softens amid Iran conflict, per agents
3h ago Introduction: UK GDP release day

Aviva CEO: companies demand political steadiness

A prominent UK business leader has highlighted how political unrest harms enterprises.

As rumors of leadership struggles intensify, Aviva CEO Amanda Blanc stated to Reuters:

There have been excessive shifts in government direction and leadership during my six years as CEO, which damages a key economy like the UK's global image.
We do not function in isolation, and stability is crucial.

Blanc referenced the bond market upheaval four years ago post-Liz Truss's mini-budget, noting:

Just consider the market response to the mini-budget - these events have real impact.

Reeves cautions against driving UK into chaos via leadership fight

Chancellor Rachel Reeves warned today that a leadership contest risks throwing the UK into disorder and endangering its recovery.

Responding to BBC queries on health secretary Wes Streeting possibly sparking a Labour leadership bid, Reeves emphasized that stronger growth enables greater investment in public services and aid for households and firms.

She stressed this relies on the stability her government has restored.

Reeves continued:

We must not endanger that by thrusting the nation into turmoil amid global conflicts and when our growth strategy is yielding results.

Rachel Reeves viewed as vital pillar for investor confidence

Persistent high UK borrowing costs could limit the chancellor's fiscal flexibility, particularly if growth falters later this year as predicted.

Lindsay James, investment strategist at Quilter, notes ministers face limited choices:

If market strains continue, tax increases or spending cuts may prove unavoidable, and any fiscal wobble could unsettle gilts further. Many see Rachel Reeves as a crucial confidence anchor, yet rigid fiscal rules often prioritize short-term margins over enduring growth strategies.
For markets, worries center on a vulnerable UK rebound clashing with a harsher global environment, compounded by rising political risks in UK assets.

ONS: Evidence of modest April slowdown

The Office for National Statistics detects hints of economic softening last month.

James Benford, ONS director-general for surveys and economic statistics, wrote in a blog:

Our monthly GDP update includes partial April spending data suggesting some Q2 softening. Consumer demand indicators point to a dip that month.
This aligns with company reports of March consumer spending weakness post-Iran conflict, partially countered by stockpiling elsewhere ahead of price hikes.

UK gilt yields decline at trading start

UK government borrowing costs have edged lower at open.

10-year gilt yield fell 3 basis points to 5.04%.

30-year yields dropped 1 basis point to 5.727%, with shorter maturities also softer.

This echoes US bond trends.

Earlier, 30-year yields reached 1998 highs amid demands for Starmer's exit timeline.

Political tensions persist, with Wes Streeting possibly challenging today; Angela Rayner cleared by HMRC on tax issues.

Rachel Reeves indicated forthcoming cost-of-living relief details next week.

On BBC News, she said:

Next week, leveraging today's figures, I'll detail additional support for families and businesses facing conflict pressures.

Energy bills are set to rise in July with the price cap reset. Reeves previously favored income-based aid over universal support and expanded business energy help.

Analysts: Q1 surge may be 2026 high water mark

Multiple experts predict January-March growth as Britain's strongest this year.

Ruth Gregory, deputy chief UK economist at Capital Economics, expects post-May deceleration:

Q1 GDP hit 0.6% q/q (matching forecasts), but Iran war impacts will curb Q2-Q3 growth to zero in baseline. Extended political unrest adds downside risks.

Michael Brown of Pepperstone agrees Q1 marks the summit:

Downside risks dominate from Middle East tensions and energy spikes acting as demand shocks. Westminster uncertainty delays investments and tightens conditions via gilt sell-off.

Raj Badiani of S&P Global Market Intelligence foresees mild contraction:

Q1 0.6% beat surveys, aided by pre-war stockpiling. Yet recession odds grow; we project Q2-Q3 shrinkage from energy shocks, inflation over 4%, and BoE rate hikes against secondary effects.

Computer programming and advertising drive Q1 strength

ONS economic statistics director Liz McKeown on GDP:

Q1 growth accelerated via services gains, notably wholesale, programming, advertising.
Production edged up; construction recovered partially from late-2025 weakness.

Reeves: GDP data confirms effective economic strategy

Chancellor Rachel Reeves has good reason to highlight her achievements today, following stronger-than-expected UK economic expansion in March.

With GDP up 0.3% in March and 0.6% for the first quarter, Reeves commented:

Today's robust growth numbers demonstrate that the government is pursuing the correct economic approach.
The decisions I have taken as chancellor have positioned our economy more strongly to manage the expenses from the Iran conflict.
This is not the moment to jeopardize our economic steadiness.

The final remark appears directed at party members attempting to oust Prime Minister Keir Starmer from office (potentially affecting the chancellor's role as well...)

Construction surges in March

UK construction output rose 1.5% in March per ONS, driven by new work and repairs.

GDP report notes:

March gains stemmed from 2.0% new work and 0.8% repair/maintenance rises; private housing new work led with 2.8%.

This reverses late-2025 declines.

UK Q1 growth at 0.6%

UK GDP expanded 0.6% in Q1, ONS confirms, from 0.2% prior quarter.

Services +0.8%, production +0.2%, construction +0.4%.

UK economy tops forecasts with March growth

Flash: UK GDP grew 0.3% in March 2026 despite Iran war effects, ONS says, vs expected -0.2%.

Follows February +0.4%, January 0% (revised from +0.5%, +0.1%).

ONS: Services +0.3%, construction +1.5%, offset by production -0.2%.

Bank of England deputy governor Sarah Breeden states no rate rises needed in June or July.

In Financial Times interview, Breeden remarked:

We have time to assess shock magnitude and economic path.
We cannot delay indefinitely, but June-July action is unnecessary.

BOE MPC member Breeden: Bank well-placed to monitor without haste.