Surveys have shown UK business and consumer confidence declining sharply. Photograph: Neil Hall/EPAView image in fullscreenSurveys have shown UK business and consumer confidence declining sharply. Photograph: Neil Hall/EPAUK economy showed surprise 0.5% growth before Iran warONS figure for February suggests economy was gaining momentum before conflict stoked inflation with soaring energy prices
The UK economy unexpectedly expanded by 0.5% in February, before the war in the Middle East dashed hopes of an uptick in growth this year, official figures show.
The unusually large increase reported by the Office for National Statistics, suggests the economy had gained momentum before the conflict began. Economists had forecast just a 0.1% expansion.
January’s flatlining figure was also revised up to 0.1% growth.
With oil and gas prices soaring as a result of the effective closure of the strait of Hormuz, economists have downgraded forecasts for UK growth in 2026.
Surveys have shown business and consumer confidence declining sharply, and investors believe interest rates could have to rise to restrain the inflationary impact of the war.
Rachel Reeves is in Washington this week, attending the International Monetary Fund’s spring meetings. On Wednesday she expressed her frustration at the likely economic impact of the conflict, telling an audience in the US capital it had been a “mistake”.
