Weekly Briefing: UK Growth Surges, Tech Investment Accelerates, Tariff Risks Loom

In this week’s GCV Weekly Briefing, we unpack a series of signals pointing to renewed momentum in the UK economy, alongside the emerging risks that could reshape the outlook.

We’ll start with the latest GDP figures, which revealed a stronger-than-expected rebound across key sectors—services, manufacturing, and construction—offering a glimmer of optimism for the months ahead.

We’ll also highlight several fresh investments aimed at strengthening the UK’s position in deep tech, including major funding for quantum innovation. Meanwhile, the housing market hit a new record for average asking prices in April, continuing its upward trend despite recent stamp duty increases.

As in last week’s briefing, we can’t ignore what’s unfolding across the Atlantic. After the S&P 500's sharp 10% spike, markets have traded sideways with ongoing volatility. With more policy decisions expected over the coming months, there’s still a lot of uncertainty, and while the rally was notable, it doesn’t necessarily mean we’re out of the woods yet. In the past, focusing on the long term has yielded the best returns for the average investor, especially during times like these.

Read on for the key UK developments shaping opportunities for investors across sectors.

UK economy rebounds sharply, but trade threats cloud outlook

• The UK economy showed surprising strength in February, with GDP rising 0.5% month-on-month, outperforming forecasts and marking the strongest growth in almost a year. The services sector led the recovery, expanding 0.3%, supported by increased consumer and business activity.
  
  
• Manufacturing output surged 1.5%, reversing January’s 0.5% decline, while construction rose 0.4%, pointing to a broad-based recovery across key sectors.
  
  
• The data prompted a swift market response, with sterling appreciating 0.6% against the dollar, as investors reassessed the likelihood of imminent interest rate cuts.
  
  
• However, growth estimates for previous months were revised down, and longer-term momentum remains fragile. The Office for Budget Responsibility downgraded its 2025 growth forecast from 2.0% to 1.0%, citing ongoing global and domestic pressures.
  
  
• Attention is now turning to U.S. trade policy. President Trump has threatened to reimpose 10% tariffs on UK exports, jeopardising the country’s largest bilateral trade relationship and casting a shadow over recent gains.
  
  
• “Though activity rebounded strongly, February’s figures have been pushed firmly into the background by the financial market bedlam caused by Trump’s tariff announcements,” noted Suren Thiru, Institute of Chartered Accountants in England and Wales

Government invests £121 million to position the UK as a global quantum leader

• The UK government has announced a £121 million investment package aimed at accelerating quantum technologies from lab to market. The funding was unveiled on World Quantum Day as part of a broader strategy to support deep tech innovation.
  
  
• The initiative includes £46.1 million via Innovate UK to support commercial projects in quantum computing, communications, and sensing. An additional £21 million will go to the National Quantum Computing Centre to expand its testbed facilities and enable industry collaboration.
  
  
• Research and skills development are also central to the strategy. EPSRC will allocate £23.6 million to five research hubs and £15.1 million to eleven early-career fellowships. Another £4.3 million will fund a new quantum apprenticeships pilot.
  
  
• The UK already hosts the world second-largest quantum ecosystem, and the new funding aims to consolidate this advantage, with applications ranging from anti-money laundering tools in financial services to precision sensing in defence and healthcare.
  
  
• The government estimates that quantum innovation could deliver thousands of high-value jobs and generate significant economic savings, particularly through AI-enhanced fraud detection.
  
  
• Peter Kyle, Secretary of State for Science, Innovation and Technology, explained that “Quantum has the potential to save millions for our economy, create thousands of jobs and improve businesses across the country—stopping fraudsters in their tracks.” 

UK housing market sees new peak in asking prices amid cautious optimism

• According to Rightmove, the average asking price for UK homes reached a record high of £377,182 in April, driven by improving sentiment and a more active market. Prices rose 1.1% month-on-month, with annual growth now at 1.3%, despite recent changes to stamp duty rules.
  
  
• Buyer activity remains robust, with enquiries up 5% year-on-year, while seller listings are also rising, 4% higher than the same period in 2023. This increase in supply has helped balance the market, though it has also reinforced the need for realistic pricing strategies.
  
  
• Regional variations remain pronounced. Scotland and the North West are showing strong annual growth (up 2.6%), while London and the South West continue to lag, with growth of just 0.4% and 0.2% respectively.
  
  
• With a Bank of England rate cut potentially on the horizon—markets expect a reduction from 4.5% to 4.25% in May—the housing market may see further support from falling mortgage rates in the coming months.
  
  
• However, high inventory levels and economic uncertainty may mean price growth is unlikely to accelerate meaningfully in the near term. Sellers are advised to remain measured in their expectations.
  
  
• “Confidence from new sellers is a good sign for the overall health of the market, but they do need to be careful when setting their asking price”, says Colleen Babcock, Rightmove

Open AI-backed ‘Stargate’ project considers UK as a potential AI hub

• A group of leading U.S. firms, including OpenAI and SoftBank, are developing a $500 billion data centre infrastructure project, known as Stargate, to support the next generation of AI systems.
  
  
• The first phase—valued at $100 billion—focuses on building high-capacity computing centres across 16 U.S. states. However, the group has confirmed it is exploring international sites for future expansion, with the UK identified as a potential strategic location.
  
  
• The UK government’s AI Energy Council, introduced in March, and recent efforts to streamline grid access have positioned the country as a strong candidate for global-scale compute infrastructure.
  
  
• Energy capacity and cost are critical factors in site selection. With the U.S. project already facing potential cost pressures from Trump’s proposed 145% tariff on Chinese tech imports—an estimated $11 billion annual increase—diversifying infrastructure internationally may become a priority.
  
  
• While no formal plans have been announced, UK policymakers are keen to attract investment, pointing to strengths in AI regulation, talent, and energy policy as key enablers.
  
  
• “This could be a really great opportunity to encourage that investment to happen,” - Project insider

Final Note

February’s unexpectedly strong GDP figures appear to have breathed new life into the UK’s recovery narrative, with broad-based growth across services, manufacturing, and construction sectors lifting short-term sentiment. However, while this rebound offers welcome relief, GDP is ultimately a short-term indicator, and deeper structural challenges likely remain beneath the surface.

Just as markets began to scale back expectations of imminent rate cuts, global risks re-entered the frame. In particular, rising trade tensions—most notably the threat of renewed U.S. tariffs—have cast a long shadow over what could have been a milestone week for UK economic momentum.

Encouraging signs do remain. New investment in quantum technologies and interest in establishing AI infrastructure suggest a strong long-term outlook, built on innovation and cross-sector growth. But these advances are not immune to geopolitical uncertainty. Their success hinges on stable global cooperation and investor confidence—two things increasingly difficult to take for granted.