UK economy grew faster than expected ahead of Iran war

UK economy grew faster than expected ahead of Iran war

Government data revealed a 0.5% surge in the UK’s economic growth for February, surpassing expectations. The Office for National Statistics (ONS) also reported a 0.1% increase in January, contradicting earlier claims of zero growth for the start of the year. These figures were released before the US-Israeli war with Iran began on 28 February, which triggered a significant energy price spike. Experts caution that prolonged conflict could lead to a global economic downturn.

This week, the International Monetary Fund (IMF) revised its UK growth forecast for the year, signaling concerns about the country being the most affected among developed economies. Most economists had anticipated a modest 0.1% rise in February’s GDP, but the ONS data showed a stronger performance. The core services sector, representing over 75% of the economy, experienced a 0.5% growth, marking the fourth consecutive monthly increase. Production output also rose by 0.5%, while construction activity climbed by 1.0%.

“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 Associate Economist Fergus Jimenez-England. The National Institute of Economic and Social Research described the recent economic expansion as “sizeable” but warned of potential slower growth in March.