UK economy grows by 0.5% in February in surprise boost for Labour

Britain’s economy grew faster than expected in February, as the services and manufacturing sectors picked up after recent slow activity, official figures show.

The Office for National Statistics (ONS) said gross domestic product (GDP) grew by 0.5%, surprising economists who had forecast just 0.1% growth.

It also marks a significant monthly improvement after no growth in January, the ONS added.

The figures come as a surprise boost for Labour and chancellor Rachel Reeves, after the party made growing the economy its key priority since winning the election last year, but momentum has been slow amid falling consumer confidence and rising inflation.

However, Reeves said on Friday that recent trade tariffs by US President Donald Trump had upended prospects for the global economy in recent weeks.

She said: “These growth figures are an encouraging sign, but we are not complacent.

“The world has changed and we have witnessed that change in recent weeks.

“I know this is an anxious time for families who are worried about the cost of living and British businesses who are worried about what this change means for them.

“This Government will remain pragmatic and cool-headed as we seek to secure the best deal with the United States that is in our national interest.”

The US has hit the UK with a blanket 10% tariff on practically all goods entering the world’s biggest economy, which is expected to hurt British exporters and dampen growth.

And recent tax rises for companies, alongside surging water, energy bills, council taxes and other consumer bills which took effect in April, could hamper the economy further.

ONS director of economic statistics Liz McKeown said: “The economy grew strongly in February with widespread growth across both services and manufacturing industries.

“Within services, computer programming, telecoms and car dealerships all had strong months, while in manufacturing, electronics and pharmaceuticals led the way and car manufacturing also picked up after its recent poor performance.

“Across the last three months as a whole, the economy also grew strongly with broad-based growth across services industries.

”Factories showed a particular turnaround in activity, with production output growing 1.5% in February after a fall of 0.5% in January.

Meanwhile, the services sector, the UK’s biggest by far, grew by 0.3% in February, up from 0.1% in January.

The construction industry also grew, by 0.4%, in February, from a 0.3% fall the previous month.

The Conservatives claimed the Government still had a “long way to go” on growing the economy.

Mel Stride, the shadow chancellor, said: “Since coming to office, Labour’s choices have killed growth stone dead and there is still a long way to go to recover.”

Nicholas Hyett, investment manager at investment firm Wealth Club, said the growth figure is “genuinely impressive”, but that it has been overshadowed by Mr Trump’s recent tariffs.

He said: “GDP data often feels a bit dated by the time it’s published – the Trump-shaped asteroid that hit markets in the last week means February’s data feels practically pre-historic.

“Nonetheless, the picture it paints is a rosy one as output grew across all three major sectors. The manufacturing sector grew rapidly while consumer services also show signs of healthy progress.”

Thomas Pugh, economist at consulting firm RSM UK added: “The big, and obvious, question now is: how will the recent tariff developments impact that positive momentum?

“It seems impossible that there isn’t some hit to business and consumer confidence which will blunt some of that newfound urge to spend.

“What’s more, the rebound in the manufacturing sector is unlikely to continue with such pervasive uncertainty weighing on the sector.”