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UK economy grew more than expected ahead of Iran war - ONS
By Abigail Townsend
Date: Thursday 16 Apr 2026
(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%.
Barret Kupelian, chief economist at PwC, said: "Had the UK economy begun to turn a corner after the Autumn Statement and before the latest developments in the Middle East? Today's data suggests it had. The UK economy looked to be finding its feet, but geopolitics may yet kick the chair away. Output grew by 0.5% in the three months to February, with both production and services expanding together.
"More importantly, this was growth powered by the private sector rather than the public sector-dominated parts of the economy that had propped up much of the post-2023 picture. That suggested the recovery was becoming broader and more durable.
"The question now is whether that recovery can withstand a fresh external shock. Leading indicators and business surveys suggest that price pressures and supply constraints are already beginning to bite in parts of the economy exposed to energy-intensive commodities and downstream products. In the short term, firms can absorb some of that strain by paying more. But the longer the crisis lasts, the greater the risk that higher costs feed through into prices, margins and, ultimately, growth itself."
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