UK economy sees unexpected growth spurt in February before tariff woes

Yahoo

11-04-2025

The British economy, the world's sixth-largest, recorded a growth spurt in February, ahead of US president Donald Trump's tariff announcements in March.
The Office for National Statistics found that the British economy grew by 0.5% in February, ahead of market expectations for a more modest increase of 0.2%. It also revised up January's figure to no change from the previous estimate of a 0.1% decline.
This was also the strongest monthly figure in eleven months.
Industrial production rose 1.5% in February, bouncing back from a 0.5% fall in January, mainly boosted by higher manufacturing output.
Production of optical products, as well as electronic and computer goods also increased 9.8% in February, along with utilities supply, which advanced 2%, despite a 3% decline in mining.
Services rose 0.3% in February, following a 0.1% increase in January, primarily driven by consultancy, computer programming, publishing and telecommunications.
Similarly, construction edged up 0.4% in February, bouncing back from a 0.3% fall in January, boosted by repair and maintenance.
UK GDP also advanced 0.6% in the three months to January.
Although February's GDP report would usually boost investor sentiment, the recent market turmoil prompted by Trump's rapidly changing tariffs is expected to lead to a global downturn, as businesses and consumers retrench in the face of the heightened economic uncertainty.
China's decision to raise tariffs on US goods from 84% to 125% from Saturday has only added to fears that the world's two biggest economies are heading for a drawn-out and damaging trade war.
While welcoming Friday's growth figures, British Treasury chief Rachel Reeves acknowledged the uncertain outlook.
'The world has changed and we have witnessed that change in recent weeks,' she said. '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".
The Labour government has said raising the UK's economic growth is the number one priority over the next five years. Since the global financial crisis in 2008-9, the British economy's growth performance has been historically lacklustre.
"Looking ahead, we expect February's reprieve to be short-lived, and think the ongoing trade war will suppress growth over the coming years. Admittedly, there is little certainty over where the 'rules of the game' end up on trade, and we think the 90-day reprieve issued by President Trump will provide little clarity for businesses and households," said Pantheon Macroeconomics in an email note.
However, it highlighted that the UK was relatively more insulated from the direct impact of more trade barriers with the US, mainly because it exports more services than goods.