The UK economy grew by 0.5% in February prior to the chaos of the Iran war

16 April 2026 , 10:45

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The UK economy grew by a surprising 0.5% in February - but this was before the full impact of the Middle East war.

This marked a sharp increase following growth of just 0.1% in January and the same in December, the Office for National Statistics said.

However, there are fears that the recovery - welcome news for Chancellor Rachel Reeves and Labour - will be undone by the Iran war, which erupted right at the end of February.

Rob Wood, chief UK economist at Pantheon Macroeconomics, said: “Well, that was a shock. February data bring some confirmation for our view that the economy was picking up speed before the Iran war as Budget uncertainty wore off." Most economists had forecast GDP to rise by just 0.1% in February.

A stark economic outlook report from the International Monetary Fund (IMF) earlier this week showed the UK facing the biggest downgrade to growth among the G7 group of countries, with 0.8% forecast for 2026, down sharply from the 1.3% predicted in January.

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TUC General Secretary Paul Nowak said: “It’s positive that our economy had a strong February as consumers returned to our shops. But Donald Trump’s illegal war risks setting back material gains seen in recent months and making us all poorer. Working people and businesses are already being hammered by Trumpflation – with petrol, gas and mortgage costs going through the roof.

“That’s why the government should pull out all the stops to protect our economy from the effects of this Trump-slump – including immediately bringing forward a temporary, targeted gas price cap and expanding access to its energy price support scheme to make sure it reaches crucial sectors. And longer-term, ministers must go all out to protect the country – and ensure those with the deepest pockets shoulder the cost.”

Barret Kupelian, chief economist at PwC, said: “Today’s data suggests it had. The UK economy looked to be finding its feet, but geopolitics may yet kick the chair away.”

Chief Secretary to the Treasury James Murray said: “Growth only happens when the economy is on solid ground. That’s why in a changing world our plan to restore stability, boost investment and deliver reform is the right one to build a stronger, more resilient Britain.

“At the IMF meetings in Washington the Chancellor has set out how we will go further and faster to boost Britain’s competitiveness and build a stronger, more resilient economy, keeping costs down for families and businesses and taking back control of our energy costs as today we cut bills by up to 25% for 10,000 British businesses.”

Shadow chancellor Sir Mel Stride said: “Any economic growth is welcome, but the IMF were clear this week that under Labour our economy is totally unprepared for the recent energy shock.”

The ONS said in the three months to February, GDP rose by 0.5% following growth of 0.3% in the three months to January, revised up from the previous estimation of 0.2%. However, it revised its figure for the three months to December 2025 down to zero growth.

Grant Fitzner, chief economist at the ONS, said growth in February was “led by broad-based increases across services”.

Services output grew by 0.5% month-on-month in February, while manufacturing activity contracted by 0.1% and construction saw a 1% rebound.

Mr Fitzner said: “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.”