UK economy grew faster than expected ahead of Iran war

Official data reveals the UK economy registered a 0.5% surge in February, surpassing prior expectations. This comes as the International Monetary Fund (IMF) revised its growth forecast for the year, citing the country as the most vulnerable among advanced economies. The statistics, however, span a period preceding the US-Israeli conflict with Iran, which erupted on 28 February and triggered a significant energy crisis.

The Office for National Statistics (ONS) confirmed that January’s growth was 0.1%, a revision from its earlier assessment of zero growth for the start of the year. Most analysts had anticipated a modest 0.1% increase in February, yet the figures show a stronger expansion. The services sector, which contributes over three-quarters of the UK’s economic output, experienced a 0.5% rise, marking the fourth consecutive monthly increase. Manufacturing and construction also saw growth, with output climbing by 0.5% and construction activity rising by 1.0%.

Despite the positive numbers, economists caution that the energy price shock from the Iran war could disrupt this momentum. The National Institute of Economic and Social Research described the recent growth as substantial but warned of potential slowdowns in March. Associate economist Fergus Jimenez-England noted: “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.”