UK economy surpasses expectations to grow 0.5% in February

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The British economy grew by 0.5 percent in February, overcoming analysts’ expectations and providing some positive news to Chancellor Rachel Reeves because it is added with the effect of US president Donald Trump’s tariff.

The monthly GDP number was on Friday from the National Statistics Office higher than both expectations by 0.1 percent by economists surveyed by Reuters and the zero growth figure in January, and it was revised from a previous estimate of 0.1 percent.

The growth has been widespread through services and manufacturing, and has been distinguished by the fastest monthly pace since March 2024.

“These growth numbers are an encouraging sign, but we are not satisfied,” Chancellor Rachel Reeves said.

“The world has changed, and we have seen this change in recent weeks. I know that this is an concern for families who are concerned about the cost of living and British companies that are concerned about the meaning of this change for them.”

The GDP numbers precede Trump’s announcement on April 2 that it will impose a highly steady import tariff on most countries in the world, including a 10 percent tax for the United Kingdom. The move sparked a sharp decrease in global stock markets and pushed fears of stagnation on both sides of the Atlantic.

On Wednesday, the US President announced a 90 -day stand in most of his “mutual” duties, but the UK’s tariff is still in place.

“The British economy has gained in February, but it seems that the customs tariff is to excel over progress,” said Yael Silvin, KPMG UK Consulting Company.

She added: “The ongoing commercial fluctuations will hinder the business beliefs significantly and restrict investment plans during the next year,” noting that the decrease in energy prices after the announcement of the customs tariff “may go on its way to alleviate the impact.”

The rise in business taxes that entered into this month will reach the activity this year, as well as the impact of the highest American definitions, according to the Capital Economics. This means that growth will be “less than our 0.8 percent less than our forecast in 2025 and 1.2 percent in 2026”.

Investors expect the Bank of England to reduce interest rates in May, then the borrowing costs decreased twice before the end of the year.

Silvin said: “With the slowdown in economic growth, the bank is likely to increase interest rate cuts to support the local economy,” Silvin said.

Separate trade data published on Friday showed that goods exports to the United States, including precious metals, increased by 500 million pounds in February 2025, which represents the third consecutive increase. They are at the highest level since November 2022, indicating that companies are trying to anticipate the US import tariff.

In the three months until February, the economy grew by 0.6 percent compared to the previous three months, which is the fastest pace since May 2024.

In February, manufacturing production was much stronger than expected with a 2.2 percent increase. Production in the services sector increased by 0.3 percent, while construction increased by 0.4 percent.

“The economy has grown strongly in February with widespread growth in both services and manufacturing,” said Liz McChyun, Director of Economic Statistics.

She said that computer programming, communications and car dealers were all strong months, while manufacturing, electronics and pharmaceutical preparations led the road. It also picked up the manufacture of cars after its last weak performance.