Millennium wheel and skyline at sunset. London, England.
Design photo editing | Universal Images Group | Getty Images
The UK economy grew by 0.5% in February, according to preliminary figures released by the Office for National Statistics on Thursday.
Economists polled by Reuters had expected Britain’s gross domestic product (GDP) to expand by 0.1% from the previous month.
In February 2026, services and production both increased by 0.5%, and construction increased by 1%.
The recovery came after the economy grew by 0.1% in January (initial estimates suggested the economy had flattened).
The International Monetary Fund warned earlier this week that Britain could suffer the biggest hit to growth from the Iran war among major economies.
The IMF now expects the UK to grow by just 0.8% in 2026, down from its previous forecast of 1.3%. What the IMF decided in January
“Looking ahead, we expect growth to slow,” Sanjay Raja, chief UK economist at Deutsche Bank, said in an emailed analysis.
“Certainly, rising uncertainty will constrain spending and investment. Tighter financial conditions are also not helping. We also expect production to take a hit as sentiment weakens,” he added.
As a net energy importer, the UK is particularly vulnerable to global energy price shocks, such as those caused by the Middle East conflict, which inhibits oil and gas exports from the region.
Before the war began in late February, the Bank of England was expected to cut interest rates as inflation cooled to its 2% target. However, the war disappointed those expectations.
Economists now expect UK inflation to accelerate from 3% in February to 3.3% in March, forcing the bank to raise interest rates at least once this year. The latest inflation statistics are scheduled to be released on April 22nd.
This is breaking news. Please refresh to check for updates.
