A surprising 0.7 per cent economic growth in the first quarter of 2025 has defied gloomy predictions, but retailers face an imminent "reality check" as April's tax increases begin to bite, according to the British Independent Retailers Association (Bira).
The latest Office for National Statistics figures released today show the UK economy expanding at its fastest pace in twelve months, outperforming City analysts' expectations of 0.6 per cent growth. While this represents welcome positive momentum for Britain's retail sector, March's more modest 0.2 per cent growth signals potentially challenging times ahead.
"Today's growth figures offer a rare moment of economic sunshine, but they don't dispel the storm clouds gathering over our high streets," said Andrew Goodacre, CEO of Bira. "The full impact of April's National Insurance hikes and persistent business rate burdens hasn't yet materialised in these numbers."
The unexpected economic resilience comes despite business leaders' earlier warnings that the Chancellor's autumn budget, including £25bn in employer National Insurance increases, would risk plunging the economy into recession.
"Independent retailers are naturally pleased to see stronger economic performance, particularly with retail contributing significantly to this growth. However, we're bracing for the delayed impact of recent cost increases that threaten to undermine this progress in the coming months," said Mr Goodacre.
Bira, which represents 6,000 independent retailers across the UK, also highlighted continued pressure from Chinese e-commerce platforms as an ongoing challenge for British high street retailers attempting to capitalise on the current economic strength.
