In the first quarter of 2025, business investment in the UK surged by 5.9%, marking its fastest growth in two years, which played a key role in achieving a 0.7% GDP increase. This growth alleviated concerns regarding the negative impact of payroll tax hikes on private spending. Notably, sectors such as transport and aircraft led the surge, likely in response to tariff uncertainties. Despite this encouraging news, warnings from economists suggest that external factors may lead to future declines in investment, especially as businesses adapt to higher operational costs.
The sharp rise in investment aided overall economic growth, contributing 0.5 percentage points to the quarter's 0.7% GDP increase, answering initial fears of spending cuts.
HSBC's Simon Wells emphasized the importance of these figures but cautioned that lingering global uncertainty could negatively impact future investment spending.
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