The UK economy grew by 0.7 per cent in the first quarter of 2025 – faster than expected and enough for Chancellor Rachel Reeves to claim the country is “turning a corner.”

But despite the headlines, many people across the UK are still asking a more pressing question: why doesn’t it feel like a recovery?

“We are set to be the fastest-growing economy in the G7 in the first three months of this year,” Reeves told the BBC. “I absolutely understand that the cost of living crisis is still real for many families, but the numbers today do show that the economy is beginning to turn a corner.”

But behind the upbeat statements, the lived experience of millions remains unchanged – or worse.

Why most people still aren’t better-off

While GDP (Gross Domestic Product, the measure of a country’s economic health) is up, real wages, living costs, and job security tell a very different story:

• Inflation may have slowed, but it hasn’t stopped. Food and energy bills remain stubbornly high.

• Mortgage rates are set to rise again, because hopes for more interest rate cuts will fade in the face of the stronger-than-expected growth. Banks like TSB have already confirmed hikes.

• The cost of borrowing remains high, and rents continue to climb, eating into disposable incomes.

• Workers on lower incomes have seen pay increases swallowed by rising costs—particularly since April’s minimum wage increase pushed some employers to cut hours or freeze hiring.

Far from feeling the benefits of a growing economy, many families feel they’re still stuck in the same economic rut.

What’s really behind the growth figures?

The 0.7 per cent quarterly growth may not be the triumph it appears.

A closer look reveals that much of the rise is due to short-term activity that’s unlikely to be repeated:

• Businesses rushed to export goods ahead of new US import tariffs, temporarily inflating output.

• Firms brought forward investment to beat the April rise in employers’ National Insurance contributions.

• Consumer spending ticked up, but this may reflect people stretching themselves financially before expected mortgage or bill increases.

Even HSBC’s Liz Martins, one of the few economists feeling “cheered” by the figures, admitted the growth came mostly from business investment and services—not broad-based improvements in household finances.

As Paul Dales from Capital Economics put it bluntly:

“This might be as good as it gets for the year.”

Storm clouds ahead: will jobs be next?

The April tax changes—rising employers’ National Insurance and an increased minimum wage—haven’t had time to show their full effects in the data. But early signs aren’t encouraging.

Many businesses are in a holding pattern, reluctant to hire or expand due to squeezed margins and rising costs:

“We’ve got tariffs. We don’t know which way we’re going – 10 per cent off a margin is quite a lot,” said John Inglis, founder of manufacturing firm Exactaform. “We’re holding fire because if you make the wrong decision now, everybody’s out of a job.”

There’s no widespread evidence yet of mass redundancies, but that could simply be a matter of time.

Business confidence is low, particularly in export-reliant sectors, hospitality, and retail—industries already vulnerable to shocks.

The truth behind the corner we’ve ‘turned’

The government is eager to claim victory, but the reality is far more fragile.

One good quarter doesn’t make a recovery—especially when that quarter is inflated by pre-emptive business activity and seasonal trends.

Rachel Reeves says she understands that people are still struggling.

But her decision to raise employers’ NI, alongside the already heavy tax burden on working households, undermines any claim to being on their side.

If anything, the risk now is that this recovery fizzles out before most people even feel it.

The economy is growing.

But until wages rise, job security improves, and the cost of living eases, it’s not the public that’s turning the corner – it’s just the headlines.