Economy grew more than expected in February – industry reaction

The UK economy grew by 0.5% in February, according to the Office for National Statistics (ONS). The data showed growth following a 0.1% fall in January.

The services sector expanded by 0.3 per cent, the production sector grew by 1.5 per cent and construction activity increased by 0.4 per cent.

Commenting on the GDP figures, ONS Director of Economic Statistics Liz McKeown said “The economy grew strongly in February with widespread growth across both services and manufacturing industries.

“Within services, computer programming, telecoms and car dealerships all had strong months, while in manufacturing, electronics and pharmaceuticals led the way and car manufacturing also picked up after its recent poor performance.

“Across the last three months as a whole, the economy also grew strongly with broad-based growth across services industries.”

Anna Leach, Chief Economist at the Institute of Directors, said “February’s GDP growth was much greater than expected and the strongest in 11 months. It was good to see pretty broad-based strength, with an acceleration in retail sales and travel services pointing to signs that consumer spending might be lifting, and a pickup in manufacturing, including car sales. However, overall car sales remain 10% down on the year amidst a range of pressures – both global and domestic.

“US actions in recent days have shaken the foundations of global trade. The UK has trodden a careful path through this turbulence, pursuing ongoing trade negotiations with the US, building relationships with other trade partners, and collecting information on the UK’s exposure to US imports ahead of any retaliatory action. This measured response is the right one.

“Unfortunately, global policy uncertainty seems likely to remain high for the foreseeable future, and this will slow decision-making and raise financing costs for business, above and beyond the direct impact of tariffs. In this environment, it is even more important for the government to pursue stronger growth via as many channels as possible. The UK’s industrial and trade strategies, de-regulation, and unleashing the benefits of AI, can all help accelerate growth in key sectors and markets, while a pragmatic approach to the net zero transition will alleviate pressure on sectors such as automotive.”

Mike Randall, CEO, Simply Asset Finance said “Businesses showed remarkable resilience in February, with a clear spike in activity that suggests growing confidence across the industry –  including a record month for some. This momentum is a promising foundation to build on, even amid uncertainty around Employers’ National Insurance and minimum wage changes.

“Now that the Spring Statement is in the rearview mirror, we cannot afford another six months of speculation in the lead up to the Autumn Budget. Businesses need real, practical support to turn potential into lasting success. It’s time for the government to shift gears from planning to action – opening up access to finance, sparking investment, and creating the right conditions for businesses to grow and flourish for the long haul.”

Martin Sartorius, Principal Economist, CBI, said “UK GDP growing above expectations in February provides some hope that the economy may have seen a solid expansion over the first quarter, following a soft patch in the second half of last year. However, underlying momentum in the private sector remains feeble. Many firms are grappling with higher labour costs following the Autumn Budget, and the recently announced US tariffs are expected to weigh on the UK and global economies.  

“Businesses are clear that the government should try to avoid further escalation in trade tensions, and instead double down on its commitment to free, fair, and open trade. However, firms also need further measures to bolster confidence amid a tough and uncertain operating environment. 

“By adopting a whole-economy perspective and using this opportunity to explore ways to ease existing pressures on businesses – such as implementing smarter regulation or revisiting the Employment Rights Bill – the government can help kickstart growth, foster innovation, and boost productivity.” 

Suren Thiru, ICAEW Economics Director said  “Though activity rebounded strongly as services and manufacturing output rallied, February’s figures have been pushed firmly into the background by the financial market bedlam caused by Trump’s tariff announcements.

“February’s uptick should mean a notably positive first quarter for the UK economy, with modest growth in March likely, possibly aided by a temporary boost from some companies bringing forward activity ahead of new US tariffs taking effect.

“Despite Trump’s partial tariff climbdown, the damaging aftereffects from this turbulence will be felt for some time with the resulting global uncertainty likely to further undermine the UK economy as it already reels from April’s surge in business costs.

“The greater global financial and economic instability caused by the US tariff announcements makes a May rate cut look more likely than not, by further fuelling rate setters’ concerns over the underlying resilience of the UK economy.”