UK economy grew more than expected ahead of Iran war - ONS

16th Apr 2026 07:36

(Sharecast News) - The UK economy expanded by more than expected in February, official data showed on Thursday, on the back of broad-based growth in the country's dominant services sector.

According to the Office for National Statistics, GDP grew by 0.5% in the three months to February, ahead of consensus for a 0.2% uplift. Growth in January was also upwardly revised to 0.3% from 0.2%.

In February, services output rose by 0.5%, while production grew by 1.2%, both of which helped offset a 2.0% slide in construction, although the rate of decline slowed from 2.8% in both January and December.

Grant Fitzner, ONS chief economist, 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."

On a monthly basis, GDP sparked 0.5% following upwardly revised growth of 0.1% in January. It was the fastest month-on-month growth in more than two years. However, global energy prices have soared since February, reigniting inflation fears and dampening expectations for rate cuts, following the outbreak of war in the Middle East.

The International Monetary Fund warned earlier this week that the UK could face a "large negative effect" on the back of higher energy costs. It has cut its outlook for British economic growth to 0.8% in 2026, from a previous forecast for 1.3%.