The UK economy grew by 0.5% in February, according to the Office for National Statistics (ONS), in a boost for chancellor Rachel Reeves before an expected downturn triggered by Donald Trump’s tariff blitz.
Friday’s monthly GDP figure was above the 0.1% increase forecast by economists polled by Reuters. There was no growth in January, revised up from a previous estimate of a 0.1% contraction.
The 0.5% rise in February came mostly due to growth in the services sector, although all sectors showed growth, the ONS said.
The figures predate Trump’s announcement on 2 April that he would impose steep import tariffs on most countries in the world, including a 10% levy for the UK. The move triggered a sharp fall in global stock markets and prompted fears of a recession on both sides of the Atlantic.
ONS director of economic statistics, Liz McKeown, said: “The economy grew strongly in February with widespread growth across both services and manufacturing industries.
“Within services, computer programming, telecoms and car dealerships all had strong months, while in manufacturing, electronics and pharmaceuticals led the way and car manufacturing also picked up after its recent poor performance.
“Across the last three months as a whole, the economy also grew strongly with broad-based growth across services industries.”
Services output increased by 0.3%, and was the largest contributor to the monthly growth in GDP, while production output rose by 1.5%, and construction output increased by 0.4%.
Reeves said: “These growth figures are an encouraging sign, but we are not complacent.”
She added: “The world has changed and we have witnessed that change in recent weeks.
“I know this is an anxious time for families who are worried about the cost of living and British businesses who are worried about what this change means for them.
“This government will remain pragmatic and cool-headed as we seek to secure the best deal with the United States that is in our national interest.
“At the same time, we will be relentless in our work to kickstart economic growth, provide security for working people and renewal for Britain.”
The UK has been hit with the blanket 10% tariff on nearly all of its goods being brought into the US, which is expected to hit British exporters and also impact economic growth.
The government has made growing the UK economy its top priority in its effort to improve living standards.
Marcus Brookes, chief investment officer at Quilter Investors, said that while the figures are a “welcome relief” for the Labour government, US tariffs have left the UK in a difficult position. He said: “The problem facing the UK, however, is that things are incredibly volatile in the world for what is a very fragile economy. President Trump may have ‘paused’ the reciprocal tariffs on other countries, but the new regime remains unchanged for the UK.
"If anything, the UK has lost a competitive edge having previously got off lightly in Trump’s announcement last week. This global economic uncertainty is going to do very little for consumer or business confidence in the UK and as such growth will continue to be lacklustre."
Amid the increased risks to the UK economy, markets now expect that the Bank of England will cut interest rates in May, and then lower borrowing costs twice more before the end of the year.
Nicholas Hyett, investment manager at Wealth Club said: "GDP data often feels a bit dated by the time it's published — the Trump shaped asteroid that hit markets in the last week means February's data feels practically pre-historic.
"Unfortunately a lot has changed since February. Higher living wage and national insurance expenses kicked in in April, though these numbers suggest they may not have been the headwind to growth we had anticipated, and perhaps more importantly Donald Trump has upended the global trade system.
"That could have caused UK economic growth to go extinct — making today's numbers a fossilised window into a lost world."
