The UK economy experienced a surprising 0.5% growth in February before the onset of the Middle East conflict. This significant increase followed minimal growth of 0.1% in both January and December, as reported by the Office for National Statistics.
Despite this positive development, concerns loom over the potential impact of the Iran war on this recovery, which erupted at the end of February. Rob Wood, chief UK economist at Pantheon Macroeconomics, expressed surprise at the February data, indicating a gradual economic acceleration prior to the conflict as Budget uncertainties diminished. Most economists had initially anticipated only a 0.1% GDP rise in February.
A recent gloomy economic forecast from the International Monetary Fund (IMF) highlighted the UK’s largest growth downgrade among the G7 nations, with a sharp decrease to 0.8% for 2026, down from the 1.3% forecasted in January.
TUC General Secretary Paul Nowak emphasized the importance of safeguarding the economy from the repercussions of the ongoing conflict, cautioning against potential setbacks. Barret Kupelian, chief economist at PwC, noted that while the UK economy seemed to be gaining momentum, geopolitical factors could pose challenges in the future.
Chief Secretary to the Treasury James Murray underscored the necessity of a stable economic foundation for sustained growth, emphasizing the government’s initiatives to enhance stability, stimulate investment, and drive reforms for a more resilient Britain. Shadow chancellor Sir Mel Stride acknowledged the positive growth but highlighted concerns raised by the IMF regarding the country’s readiness to address recent energy shocks.
According to the ONS, GDP rose by 0.5% in the three months leading to February, with services driving the growth. Service sector output increased by 0.5% in February, while manufacturing saw a slight decline of 0.1%, and construction rebounded by 1%.
Grant Fitzner, chief economist at the ONS, attributed the February growth to improvements across various service industries such as wholesaling, market research, hospitality, and publishing. He also noted a recovery in car production following a previous cyber incident.