People walk in Trafalgar Square, London, on April 28, 2025.
Adrien fillon | Nurphoto | Getty images
It has been weird that a series of positive economic news from the United Kingdom arise in 2025, but this particular week has given Great Britain three reasons to be optimistic.
Friday data indicated an unexpected positive impulse in the country’s economy, and retail sales increased by 1.2% much better than expected in April, and the GFK consumer confidence index that shows an improvement in feeling.
Sterling won 0.6% against the US dollar after the figures were published on Friday to operate around $ 1.35.
The combination of the two positive figures on Friday reduced expectations and logic for some economists. It was widely expected that economic activity in April showed a bearish trend, partly thanks to the World Trade War of the President of the United States, Donald Trump,.
“Well, that challenges the idea of ​​a cautious consumer,” said Rob Wood, chief economist of the United Kingdom of Pantheon Macroeconomics, adding that several factors, some not influenced by politicians or companies, were at stake.
“That said, the official growth of sales look too well to be true, since the seasonal adjustment cannot control properly for the posterior Easter of this year,” Wood added. “There is no doubt that the weather helped a lot, with March and April registering the greatest amount of sun since the records began.”
Taken in isolation, Friday’s retail figures and consumer confidence data perhaps point to growth in the current quarter. However, the British Electricity Regulator ofgem joined the positive feeling by declaring on Friday that electricity prices will decrease by 7% in July. That could potentially combine spending in other sectors in the coming months.
“This is certainly an improvement for household expenses, with monthly invoices that will probably fall on average in around £ 11,” said Henderson, an investor economist.
Meanwhile, the series of positive elements could increase the economic growth of the United Kingdom for the second quarter as a whole, according to Allan Monks, chief economist of the United Kingdom in JPMorgan, which predicts an annualized gain of 0.6%.
“With the high home savings rate, a continuous improvement in trust has the potential to unlock more consumer expenses,” JP Morgan monks said in a client note on Friday. “High inflation, softer salary growth and weak employment argue against a continuation of that trend. But the increase in confidence in May was matched by a remarkable fall in unemployment fears, the greatest expectations of inflation and an increase in the intentions of expenses.”
The perspective of the United Kingdom has been seen during the past year. The country has dealt with setbacks such as unexpected economic contraction and a growing concern for fiscal spending plans, while seeing some more positive data and the agreement of historical trade agreements with the United States, India and the EU.
Earlier this week, official figures showed that the economy grew 0.7% in the first quarter of 2025, although that occurred when internal inflation increased to 3.5% in April. Last week, another data impression showed that the average profits in the United Kingdom had grown by 5.9% annually.
The combination of data meant that economists seemed divided on Friday on what the last episode of data for the long -term economic image of the United Kingdom meant.
Alex Kerr, an economist from the United Kingdom of Economics, warned that “the sun will not shine [Britain’s] Retail sector forever. “
“Although for the first time since 2015, excluding pandemia, retail sales volumes have increased for four months in a row, the impressive increase of 1.2% m/m of April was largely driven by the unusually warm climate,” he said in a note sent shortly after the figures.
“That impulse will not last. Therefore, although consumer confidence increased slightly in May, we suspect that the growth of retail sales will slow down in the coming months.”
‘Depressed’ britos that resort to retail therapy
Although most economists saw the small increase in consumer confidence in May as a positive signal for the economic growth of the next quarter, others suggested that, as the general feeling remains below the pre-pondemic levels, the link between spending and feeling can break.
“Depressed British consumers have resorted to retail therapy to deal with their economic and financial problems,” said Andrew Wishart, a senior economist from the United Kingdom in Berenberg.
Instead, Wishart said that a combination of pandemic, and subsistence increases in inflation and interest rates led consumers to underpin their finances.
“Households have increased their savings rate (the proportion of unbounded family income) to a previously invisible level outside the mass unemployment periods,” Wishart added.
When stabilizing their bank balances and guaranteed salary increases, consumers are now spending in advance of an interest rate and a more stable price environment, according to the economist.
Contraz intuitively, additional spending means that the Bank of England was more likely to keep the rates for the rest of the year, which the cut, he added.
Janet Mui, head of market analysis at Wealth Manager RBC Brewin Dolphin, said in an email on Friday morning that with salary growth now they exceed inflation, the homes of the United Kingdom are spending more generously. However, he warned that the state of public finances of the State of Great Britain “are still a restriction.”
“With higher indebted costs, more taxes and departmental expenses cuts can occur,” he explained. “This raises some medium -term growth risks for the United Kingdom in the midst of continuous uncertainty with the way in which the world commercial situation will be established.”
