The UK economy experienced unexpected growth of 0.5% in February, surpassing the 0.1% growth seen in both January and December, according to the Office for National Statistics. This positive trend was attributed to a reduction in Budget uncertainty before the outbreak of the Iran war. Most economists had predicted a smaller increase of 0.1% for February.

Despite this growth, concerns loom over the potential impact of the Iran conflict on the economy. The International Monetary Fund (IMF) recently downgraded the UK’s growth forecast for 2026 to 0.8%, a significant decrease from the 1.3% previously projected in January.

Following the strong economic performance in February, TUC General Secretary Paul Nowak highlighted the risks posed by geopolitical events, particularly referencing the consequences of Donald Trump’s actions on inflation and living costs. He urged the government to take immediate steps to shield the economy from further disruptions.

Barret Kupelian, the chief economist at PwC, expressed cautious optimism about the economy’s trajectory, noting the influence of global politics on its stability. Meanwhile, Chief Secretary to the Treasury James Murray emphasized the importance of maintaining a solid economic foundation through stability, investment, and reform efforts.

In response, Shadow Chancellor Sir Mel Stride acknowledged the growth but emphasized the need for preparedness in the face of energy-related challenges. The ONS reported a 0.5% GDP increase in the three months leading up to February, driven by growth in the service sector. Notably, services like wholesaling, market research, hospitality, and publishing showed strong performance during this period, contributing to the overall economic expansion.