The economy performed better than expected in February, growing by 0.5% according to official figures released on Friday, but comes ahead of an expected hit from the global trade war.
The standard measure of an economy’s value, gross domestic product (GDP), rose in part thanks to a suprisingly strong performance from the manufacturing sector, data from the Office for National Statistics (ONS) suggested.
The British pound jumped against the dollar after the data release, rising 0.3%.
Analysts had been forecasting just a 0.1% GDP hike in the lead-up to the announcement, according to data from LSEG.
Chancellor of the Exchequer Rachel Reeves described the results as “encouraging”, but struck a cautious tone when alluding to US President Donald Trump’s tariffs, and the economic volatility of the past week.
“The world has changed, and we have witnessed that change in recent weeks,” she said.
“I know this is an anxious time for families who are worried about the cost of living and British businesses who are worried about what this change means for them,” Ms Reeves added. “This government will remain pragmatic and cool-headed as we seek to secure the best deal with the United States that is in our national interest.”
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But back in February, when Mr Trump was just beginning his second term in office, the UK’s economy looked to be on firmer ground.
Service sectors like computer programming, telecoms and car dealerships all had strong a month, while manufacturing industries such as electronics and pharmaceuticals also helped to drive GDP growth in February.
Car manufacturing also picked up after its recent poor performance.
“The economy grew strongly in February with widespread growth across both services and manufacturing industries,” said Liz McKeown, ONS Director of Economic Statistics.
While motor vehicle manufacturing and retail both grew in February 2025, they remain below February 2024 levels by 10.1% and 1.1% respectively
This aligns with industry data showing year-on-year declines in registrations and manufacturing.
“The UK economy expanded by 0.5% in February, surprising but welcome positive news,” said Hailey Low, Associate Economist at the National Institute of Economic and Social Research.
“However, heightened global uncertainty and escalating trade tensions mean the outlook remains uncertain, with a likely reduced growth rate this year due to President Trump’s “Liberation Day” announcements.”
Ms Low said that this could create a dilemma for Ms Reeves, who would face difficult decisions later in the year when the chancellor presents her next budget.
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The latest data also shows a jump from January, when the economy was flat. And compared to the same month a year ago, GDP was 1.4% higher in February 2025.
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