Economy Surpasses Expectations with Robust Growth in February

UK
The United Kingdom's economy demonstrated a stronger-than-anticipated performance in February, according to data released by the Office for National Statistics (ONS). Gross Domestic Product (GDP) saw a significant increase of 0.5% during the month, a notable rebound from the revised figure of no growth in January. This positive upturn has surprised economists, who had generally predicted a more modest expansion of around 0.1% for the month.
The ONS highlighted that this growth was broad-based across various sectors of the economy. The services sector, which is the largest contributor to the UK's GDP, experienced a 0.3% increase in February, building on the 0.1% growth seen in the previous month. Within the services industry, strong performances were observed in areas such as computer programming, telecommunications, and car dealerships.
The manufacturing sector also showed a marked improvement, with production output growing by 1.5% in February. This represents a significant turnaround from the 0.5% contraction experienced in January. Key drivers within manufacturing included electronics, pharmaceuticals, and a recovery in car production following a period of weaker results. The construction sector also contributed positively to the overall growth, expanding by 0.4% after a 0.3% fall in January.
Looking at the broader economic picture, the ONS estimates that real GDP grew by 0.6% in the three months leading up to February 2025, when compared to the three months prior to November 2024. This growth over the three-month period was largely attributed to the expansion within the services sector.
In separate figures, the ONS also reported a narrowing of the UK's total trade deficit in goods and services. The deficit decreased by £7.5 billion to £1.0 billion in the three months to February, marking the lowest total trade deficit since the three months to July 2021. This was driven by a £3.5 billion reduction in the trade in goods deficit and an estimated £4.0 billion widening of the trade in services surplus.
While the February growth figures provide an encouraging sign for the UK economy, particularly for the Labour government's "Plan for Change," there remains a degree of caution regarding the future outlook. Concerns have arisen due to recent global events, notably the potential impact of new tariffs announced by the United States, which could lead to a broader trade war. These developments have introduced uncertainty into the economic forecast and could potentially dampen business investment and consumer spending in the coming months. Additionally, households are facing increased costs related to utility bills and council tax, while businesses are navigating rises in labor costs through National Insurance and minimum wage increases.
Despite these challenges, the stronger-than-expected growth in February, coupled with a narrowing trade deficit, suggests a degree of underlying resilience in the UK economy. The coming months will be crucial in determining whether this momentum can be sustained in the face of emerging global economic headwinds. Economists will be closely monitoring indicators such as consumer confidence, business investment, and the impact of rising costs to gauge the true strength and trajectory of the UK economy throughout the remainder of 2025.
Source@BBC