The UK has reported a 0.4 per cent increase in GDP in February despite the economy remaining hampered by a third Covid lockdown.

While returning to modest growth after shrinking in January will be viewed positively – as will a revision of January’s fall from 2.9 per cent up to 2.2 per cent – the economy still remains well below levels seen at the start of 2020, and below the 0.5 per cent growth that was the consensus estimate from economists for February.

The figures released by the  Office for National Statistics this morning show the economy is still some 7.8 per cent smaller than it was last February.

While the construction and manufacturing sectors led the way – growing 1.6 per cent and 1.3 per cent respectively – the services sector was still only able to post modest expansion of 0.2 per cent as coronavirus restrictions continued to take their toll.

Invesco global head of asset allocation research Paul Jackson says: “The UK’s successful vaccination programme allows the possibility of a return towards ‘normality’ within the domestic economy.  However, large parts of the global population will remain unvaccinated for some time, which, along with a new wave of infections in many parts of the world (and the prevalence of new Covid variants), suggests the UK may have to maintain some international travel restrictions beyond the end of 2021. Full “normality” is unlikely to be achieved this year.”

Close Brothers Asset Management chief investment officer Robert Alster adds: “With the lockdown lifting, growth will be driven by spending and corporate investment.  But there remains one big unknown – the true state of the job market. The furlough scheme will phase out from July to September, and it’s unclear whether businesses will re-hire all their workers. In a worst case scenario, a sustained rise in unemployment could undermine a strong UK recovery.”