UK economy beats forecasts with 0.5% growth in February

Britain’s economy delivered a stronger-than-expected performance in February, offering a welcome boost to Chancellor Rachel Reeves and the Labour government as it braces for potential headwinds from escalating global trade tensions sparked by Donald Trump’s return to the White House.

Figures released today by the Office for National Statistics (ONS) show that UK gross domestic product (GDP) grew by 0.5% in February, outpacing economist forecasts of a modest 0.1% rise. The rebound marks a sharp improvement from January, which initially showed a 0.1% contraction but has since been revised to flat growth.

The monthly upswing was broad-based, with gains across all major sectors. The services sector, which accounts for the lion’s share of UK economic output, grew by 0.3%, building on January’s 0.1% rise. Industrial production surged 1.5%—the strongest monthly increase in over a year—driven by a notable pickup in manufacturing. Construction also posted a modest 0.4% gain after a weak January.

In the three months to February, GDP rose by 0.6%, largely underpinned by the resilience of the services sector, which also grew by 0.6% over the same period. The ONS attributed the momentum in part to improving consumer activity and robust manufacturing output.

The figures represent a timely win for Chancellor Reeves, who has staked her reputation on restoring economic growth and investor confidence after a sluggish second half of 2024. However, the February data predates the announcement of new US tariffs by President Trump—measures that economists warn could have far-reaching consequences for UK exports and global supply chains.

Economists have urged caution despite the upbeat numbers.

“UK GDP growing above expectations in February provides some hope that the economy may have seen a solid expansion over the first quarter,” said Martin Sartorius, Principal Economist at the Confederation of British Industry (CBI). “However, underlying momentum in the private sector remains feeble.”

Sartorius pointed to mounting pressure on firms following higher labour costs introduced in the Autumn Budget, and warned that Trump’s tariff regime could create fresh uncertainty for British businesses already navigating a fragile post-Brexit trade landscape.

“Businesses are clear that the government should try to avoid further escalation in trade tensions,” he said. “At the same time, firms need broader support to boost confidence—whether through smarter regulation or revisiting key reforms like the Employment Rights Bill.”

“Businesses are clear that the government should try to avoid further escalation in trade tensions, and instead double down on its commitment to free, fair, and open trade,” he said. “However, firms also need further measures to bolster confidence amid a tough and uncertain operating environment.

“By adopting a whole-economy perspective and using this opportunity to explore ways to ease existing pressures on businesses – such as implementing smarter regulation or revisiting the Employment Rights Bill – the government can help kickstart growth, foster innovation, and boost productivity.”

Mike Randall, CEO at Simply Asset Finance, noted: “Businesses showed remarkable resilience in February, with a clear spike in activity that suggests growing confidence across the industry – including a record month for some. This momentum is a promising foundation to build on, even amid uncertainty around Employers’ National Insurance and minimum wage changes.

“Now that the Spring Statement is in the rearview mirror, we cannot afford another six months of speculation in the lead up to the Autumn Budget. Businesses need real, practical support to turn potential into lasting success. It’s time for the government to shift gears from planning to action – opening up access to finance, sparking investment, and creating the right conditions for businesses to grow and flourish for the long haul.”