The UK economy performed better than expected in February, growing by 0.5%, according to latest figures from the Office for National Statistics (ONS).
The growth in gross domestic product (GDP) was driven by a boost in manufacturing and production, the ONS said.
It reversed a modest fall in January and was five times larger than the 0.1% growth predicted by economists.
Chancellor Rachel Reeves called the latest growth figures an “encouraging sign”.
“We must go further and faster to kickstart economic growth, provide security for working people and put more money in their pockets,” she said.
However, the turnaround in the economy may not last amid Donald Trump’s tariff war.
Analysts have warned that growth could prove short-lived as the UK is subject to the blanket 10% tariff on nearly all of its goods being brought into the US, which is expected to hit British exporters and also affect economic growth.
David Morrison, senior market analyst at FCA-regulated fintech and financial services provider, Trade Nation, comments: “Finally there’s some good news for UK Chancellor Rachel Reeves. But it’s also the case that one number doesn’t make a trend. The outlook for the UK economy remains downbeat, with the added uncertainty of the effects of Trump’s watered-down tariffs.
“Amid the ongoing tariff chaos, the market reaction to the better-than-expected data was understandably muted. Sterling briefly spiked higher, while the FTSE 100 futures added to gains as they followed the overnight rally in US stock index futures.”
Phoebus Software chief sales and marketing officer Richard Pike says: “News that GDP is estimated to have grown by 0.5% in February 2025, with growths in all main sectors, is a welcome surprise given the headwinds the UK economy has been facing. With independent forecasts for 2025 GDP growth hovering around just 1.1%, and many analysts revising their predictions downward due to rising business taxes and softer global demand, this is an unexpected but positive development.
“The resilience is particularly striking in the context of recent global pressures, not least the new US tariffs, which prompted KPMG and others to downgrade their UK growth forecasts. Although Trump announced on Wednesday a 90-day pause to the tariffs, which will provide some respite, the ongoing uncertainty and turbulence is unsettling for the market. While it’s too early to tell whether this growth marks the start of a more sustained recovery, it will certainly be interesting to see how this data impacts the Bank of England’s next interest rate decision.”
