It’s been rare for a string of positive economic news to emerge out of the U.K. in 2025 — but this week in particular has given Britain three reasons to be optimistic.
Data on Friday signaled unexpected positive momentum in the country’s economy, with retail sales rising by a much better-than-expected 1.2% in April, and GfK’s consumer confidence index showing an improvement in sentiment.
Sterling gained 0.6% against the U.S. dollar after the figures were published on Friday, to trade at around $1.35.
The combination of the two positive figures on Friday bucked expectations, and logic, for some economists. Economic activity in April was widely expected to show a downtrend, in part thanks to U.S. President Donald Trump’s global trade war.
“Well now, that challenges the idea of a cautious consumer,” said Rob Wood, chief U.K. economist at Pantheon Macroeconomics, adding that a number of factors, some not influenced by politicians or businesses, were at play.
“That said, official sales growth looks too good to be true, likely as the seasonal adjustment fails to adequately control for the later Easter this year,” Wood added. “There’s no doubt the weather helped a lot, with both March and April registering the most sunshine since records began.”
Taken in isolation, Friday’s retail figures and consumer confidence data perhaps point to growth in the current quarter. However, British electricity regulator Ofgem added to the positive sentiment by declaring on Friday that electricity prices are set to decline by 7% in July. That could potentially fuel spending in other sectors in the coming months.
“This is certainly an improvement for household expenses, with monthly bills likely to fall on average by around £11,” said Ellie Henderson, economist at Investec.
Meanwhile, the string of positive elements could potentially bump up U.K. economic growth for the second quarter as a whole, according to Allan Monks, chief U.K. economist at JPMorgan who is forecasting a 0.6% annualised gain.
The outlook for the U.K. has seesawed over the past year. The country has grappled with setbacks like unexpected economic contraction and mounting concern about fiscal spending plans, while also seeing some more positive data and the agreement of landmark trade deals with the U.S, India and the EU.
Earlier this week, official figures showed the economy grew by 0.7% in the first quarter of 2025 — although that came as domestic inflation surged to 3.5% in April. Last week, another data print showed average earnings in the U.K. had grown by 5.9% on an annual basis.