Britain’s economy grew faster than expected in February, just before the Iran war sent energy prices sharply higher and raised fresh doubts over the durability of the recovery. Official data showed gross domestic product rising 0.5% on the month, more than double economists’ forecasts, driven by broad-based gains in services and a rebound in car production after an earlier cyber incident.
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“Growth increased further in the three months to February, led by broad-based increases across services,” said Grant Fitzner, chief economist at the Office for National Statistics. “Meanwhile, car production recovered from the effects of the autumn cyber incident.”
Finance minister Rachel Reeves is likely to welcome signs the economy was in better shape than feared, but analysts warned the energy shock unleashed by the Iran conflict could quickly sap momentum. “Unfortunately, the latest energy price shock has likely pulled the rug on this momentum, with another year of above-target inflation and a softening labour market likely to come,” said Fergus Jiminez‑England of the National Institute for Economic and Social Research.
GDP also rose 0.5% in the three months to February, putting the UK on course for another strong first quarter, though some economists question whether seasonal adjustment is overstating early‑year growth after the distortions of the pandemic. An ONS spokesperson said officials were “confident in our figures and seasonal adjustment processes.”
