LONDON, May 15, 2025 (BSS/AFP) - Britain's economy grew more than expected in the first quarter, official data showed Thursday, covering the period before business tax hikes and US President Donald Trump's tariffs blitz took effect.

Gross domestic product rose 0.7 percent in the January-to-March period after only growing slightly in the final quarter of last year, the Office for National Statistics said in a statement.

The data comes as a boost for the Labour government, which struggled to kickstart stagnant growth since it came into power in July.

UK finance minister Rachel Reeves welcomed the news saying the figures "show the strength and potential of the UK economy."

But analysts cautioned that the bumper growth may not be sustained.

Thursday's data covers the period before April's introduction of a hike to a business tax laid out in the Labour government's maiden budget in October.

It also precedes a baseline 10-percent tariff imposed on the UK and other countries by US President Donald Trump last month.

The growth spurt is "set to be short lived as tariffs take effect" said Yael Selfin, chief economist at KPMG UK.

Despite the announcement of a UK-US trade agreement last week, "tariffs on UK exports to the US remain significantly higher than what they were prior to April," she added.

The US deal reduces tariffs on British cars and removes those on steel and aluminium, while in return Britain will open up markets to US beef and other farm products.

"Additionally, the indirect impact of trade tensions between the US and the EU will further constrain demand for UK exports," Selfin said.

The data comes after the Bank of England last week cut its key interest rate by a quarter point to 4.25 percent as the threat of US tariffs starts to weigh on economic growth.

"The economy grew strongly in the first quarter of the year, largely driven by services, though production also grew significantly, after a period of decline," said Liz McKeown, ONS director of economic statistics.