UK economy grew faster than expected ahead of Iran war

UK economy grew faster than expected ahead of Iran war

UK economic activity surged by 0.5% in February, exceeding forecasts. The Office for National Statistics (ONS) reported the figure, which marks a notable acceleration compared to earlier expectations. January’s growth was also revised upward to 0.1%, after initial reports suggested no expansion at the start of the year.

The data, released before the US-Israeli conflict with Iran escalated on 28 February, highlights a period of resilience amid rising energy costs. Analysts caution that the ongoing war could disrupt this momentum, potentially triggering a global economic slowdown if tensions persist.

IMF revises growth outlook

This week, the International Monetary Fund (IMF) adjusted its forecast for UK economic growth this year. The agency now anticipates the country will face the most significant contraction among developed economies, signaling heightened uncertainty.

Services sector leads expansion

The services industry, a cornerstone of the UK economy, expanded by 0.5% in February. This represents the fourth consecutive month of growth, as the sector accounts for over 75% of GDP. Meanwhile, manufacturing output also rose by 0.5%, while construction activity climbed by 1.0%.

Most economists had projected a modest 0.1% GDP increase for February, underscoring the surprise element of the latest figures. However, the National Institute of Economic and Social Research noted that this growth may be short-lived.

“Unfortunately, the recent energy price spike has likely stalled this upward trend,” remarked Fergus Jimenez-England, an associate economist. “Further inflationary pressures and a weakening labor market could follow, compounding the challenges.”