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The UK economy experienced a growth of 0.5% in February, surpassing analysts’ predictions and offering a positive outlook for Chancellor Rachel Reeves amidst the challenges posed by US President Donald Trump’s tariffs.
The monthly GDP data released by the Office for National Statistics on Friday exceeded the 0.1% increase forecasted by economists and the previous month’s zero growth, which was revised up from a 0.1% contraction.
This growth was observed across various sectors including services and manufacturing, marking the fastest monthly growth rate since March 2024.
In response to the figures, Chancellor Rachel Reeves stated, “These growth figures are promising, but we remain vigilant.
“The landscape has shifted, and recent events have reflected that change. I understand the concerns of families regarding living costs and the uncertainties faced by British businesses in light of these changes.”
The GDP data predates Trump’s announcement on April 2 regarding steep tariffs on US imports, including a 10% global baseline that impacted the UK. This move led to a sharp decline in global stock markets and raised concerns about a potential recession on both sides of the Atlantic.
Following a 90-day pause on some of the reciprocal duties by the US president, Yael Selfin, chief economist at KPMG UK, commented that ongoing trade volatility is expected to hinder business sentiment and investment plans in the coming months.
Despite the positive growth trend, concerns remain about the impact of higher US tariffs and recent tax increases on businesses. Analysts predict a lower growth rate for 2025 and 2026 compared to previous forecasts.
With expectations of interest rate cuts by the Bank of England and a slowdown in economic growth, measures are being considered to support the domestic economy.
Recent trade data also indicated a surge in UK exports to the US, driven by non-ferrous metals, in anticipation of potential tariffs.
The economy’s growth in February was driven by strong performances in various industries, including computer programming, telecoms, and car dealerships. Manufacturing production saw a significant increase, with electronics and pharmaceuticals leading the way.