UK economy grew by 0.5% in February
The UK economy expanded significantly faster than anticipated prior to the onset of the Iran war, which has since disrupted global economic activity.
According to new figures from the Office for National Statistics (ONS), UK GDP increased by 0.5% in February, a notable rise compared to the 0.1% growth forecasted by City analysts.
The ONS detailed that both services and production sectors grew by 0.5%, while construction experienced a 1.0% increase during the month.
Additionally, January’s GDP figures were revised upward to reflect 0.1% growth, correcting previous data that indicated stagnation.
Under normal circumstances, this data would represent a considerable positive development for Chancellor Rachel Reeves. However, the figures are somewhat historical, as the conflict in the Middle East is currently reshaping global economic prospects for the year.
Earlier in the week, the International Monetary Fund (IMF) lowered its forecast for UK economic growth in 2026 to 0.8%, down from a prior estimate of 1.3%.
ONS: Growth increased further in the three months to February
The UK economy also recorded 0.5% growth over the three months ending in February, an improvement from 0.3% growth in the three months to January. This increase was partly driven by the resolution of disruptions caused by a cyber-attack on Jaguar Land Rover in the previous autumn.
Grant Fitzner, chief economist at the ONS, commented on the data:
“Growth increased further in the three months to February led by broad-based increases across services.
Within services, growth was driven by wholesaling, market research, hospitality, and publishing, which all performed well in the three months to February. Meanwhile car production recovered from the effects of the autumn cyber incident.
Growth in services and production was partially offset by another fall in construction, albeit at a slower rate than previously, with leasing and intellectual property licencing also continuing to contract.”
China's economy beats forecast in first quarter
China’s economy demonstrated accelerated growth in the first quarter of 2026, signaling a positive start to the year for Beijing.
Data released by the National Bureau of Statistics (NBS) shows China’s GDP grew by 5% year-on-year in Q1 2026, which is 0.5 percentage points faster than the growth recorded in the fourth quarter of 2025.
The NBS stated:
“The national economy got off to a good start,”
“The growth of production and supply accelerated, market demand continued to improve, employment was generally stable, market prices picked up moderately, and high-quality development advanced with new and positive momentum.”
Reeves gives more energy bill support to businesses as Iran war pushes up costs
In response to rising energy costs driven by the Middle East conflict, Chancellor Rachel Reeves announced an expansion of support for the UK’s most energy-intensive businesses.
The British Industrial Competitiveness Scheme (BICS), initially planned to assist 7,000 companies, will now cover 10,000 businesses. The government estimates the scheme will reduce energy bills by up to 25% for participating companies.
Although the scheme will not be implemented until next year, Reeves confirmed that support will be backdated to the current month.
While business groups welcomed the announcement, some criticized the delay in funding availability, urging Reeves to accelerate support to address the imminent financial pressures caused by the conflict.
Introduction: UK February GDP report coming up
Good morning, and welcome to our continuous coverage of business, financial markets, and the global economy.
Economic data typically has a limited relevance period before new figures emerge. However, it is unusual for data to be outdated even before its release.
This is the case with the UK’s February GDP report, scheduled for release at 7am today.
Market expectations forecast modest economic growth, with GDP predicted to rise by 0.1%, according to consensus estimates. Forecasts vary between no growth and 0.3% growth.
However, the Middle East conflict, which began at the end of February, has already altered the UK’s economic environment, introducing higher energy prices, concerns over food inflation, supply chain disruptions, and geopolitical tensions.
The economy showed no growth in January, although this figure may be revised with today’s data. Sanjay Raja of Deutsche Bank described January’s stagnation as a “disappointment,” adding:
“With the economy stagnating to start the year, we expect a rebound in February. We don’t discount an upward revision to January GDP either. Our nowcast models point to both a potential upward revision to January and some further upward momentum in February.”
Regarding February GDP, Raja stated expectations of a 0.2% month-on-month expansion, supported by broad momentum across services, production, and construction sectors.
The GDP data release coincides with Chancellor Rachel Reeves’ attendance at the IMF and World Bank spring meetings in Washington DC, where she described the Iran war as a “mistake” destabilizing the global economy.
The agenda
- 7am BST: UK GDP report for February
- 10am BST: Eurozone inflation report for March
- 5pm BST: IMF debate on the global economy
