UK economy grew 0.5% in February, beating economists' expectations by a long shot

The U.K. economy grew by 0.5% in February, according to preliminary figures from the Office for National Statistics published Thursday.

Economists polled by Reuters expected U.K. gross domestic product (GDP) to have expanded by 0.1% month-on-month.

Services and production both grew by 0.5%, and construction grew by 1% in February 2026.

The rebound came after the economy grew by 0.1% in January (the first estimate suggested the economy had flatlined), and warnings from the International Monetary Fund that the U.K. could see the biggest hit to growth from the Iran war of any major economy.

The IMF is now forecasting U.K. growth of just 0.8% in 2026, down from a previous forecast of 1.3%. that the IMF made in January

“Looking ahead, we expect growth to temper,” Sanjay Raja, chief U.K. economist at Deutsche Bank, said in emailed analysis.

“Indeed, higher uncertainty would dampen spending and investment. Tighter financial conditions won’t help either. With sentiment weakening, we expect output to also take a hit,” he added.

As a net importer of energy, the U.K. is particularly vulnerable to global energy price shocks like the one being caused by conflict in the Middle East, which has put a stranglehold on oil and gas exports from the region.

Before the war began in late February, the Bank of England was expected to cut interest rates as inflation cooled to its 2% target. The war has put paid to those expectations, however.

Economists now expect U.K inflation to accelerate in March to 3.3%, from 3% in February, forcing the bank to hike interest rates at least once this year. The latest inflation data is due on April 22.

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