UK GDP expanded by a stronger than expected 0.5% in February, official figures show, suggesting the economy was gaining momentum before the onset of war in the Middle East dashed hopes of recovery.
The jump, reported by the Office for National Statistics (ONS), was significantly bigger than the 0.1% forecast by economists. January’s flatlining figure was also revised up, to 0.1% growth.
The ONS said February’s upturn was driven by a strong performance from the services sector and from manufacturing, both of which posted 0.5% growth, and a recovery in construction output, which was up 1%.
Over the three months to February – a measure that tends to be less volatile than the monthly data – GDP expanded by 0.5%, up from 0.3% in the three months to January, echoing the picture of strengthening growth.
Grant Fitzner, the ONS chief economist, said: “Growth increased further in the three months to February, led by broad-based increases across services. Within services, growth was driven by wholesaling, market research, hospitality and publishing, which all performed well in the three months to February.”
He added that Jaguar Land Rover’s recovery from last autumn’s damaging cyber-attack that halted production for weeks had also contributed to the improving three-monthly picture.
While there may have been evidence of a nascent recovery in February, economists have significantly downgraded forecasts for UK growth in 2026, with oil and gas prices soaring as a result of the effective closure of the strait of Hormuz.
Surveys have shown business and consumer confidence declining sharply, and investors believe interest rates may have to rise to restrain the inflationary impact of the war.
Martin Beck, the chief economist at the consultancy WPI Strategy, said: “The real danger is that February turns out to be the calm before the storm, with the consequences of conflict in the Middle East dragging overall Q1 growth down. Last month saw a sharp rise in energy prices alongside a surge in geopolitical uncertainty.”
Rachel Reeves is in Washington this week, attending the International Monetary Fund’s spring meetings. On Wednesday she expressed her frustration at the likely economic impact of the conflict, telling an audience in the US capital it had been a “mistake”.
Responding to the GDP data, the chief secretary to the Treasury James Murray said: “Growth only happens when the economy is on solid ground. That’s why in a changing world our plan to restore stability, boost investment and deliver reform is the right one to build a more stronger more resilient Britain.”
The shadow chancellor, Mel Stride, said: “Any economic growth is welcome, but the IMF were clear this week that under Labour our economy is totally unprepared for the recent energy shock.”
