The United Kingdom’s economy grew 0.5% in February, the fastest monthly expansion since January 2024, according to official data released by the Office for National Statistics on Thursday. The figure exceeded analyst forecasts of just 0.1% and came alongside an upward revision to January’s previously reported flat reading, now showing 0.1% growth instead.
For the three months to February, GDP grew at 0.5% against a 0.2% consensus, providing clear evidence that the UK economy was gaining momentum heading into spring.
The data, however, sits in an increasingly uncomfortable temporal context. Grant Fitzner, the ONS chief economist, acknowledged the forward-looking limitation directly, noting that the figures reflect conditions “before the outbreak of the war in the Middle East.” The practical implication is that the headline growth numbers have limited relevance to current conditions, serving as a pre-conflict baseline rather than a guide to where the economy is now.
The International Monetary Fund’s assessment of the UK’s post-conflict trajectory is considerably darker. A report released this week showed the UK facing the steepest growth downgrade among G7 nations, with the IMF now projecting 0.8% GDP growth for 2026, down sharply from the 1.3% it forecast in January. The IMF noted that even in a best-case scenario, global growth faces downward revision due to the war’s effects on energy markets and supply chain confidence.
The services sector led February’s GDP performance, with wholesaling, market research, hospitality and publishing all posting strong three-month results. That breadth of sectoral contribution gave the data a quality that went beyond a single industry outlier, suggesting underlying demand conditions were in reasonable shape before the conflict disrupted oil prices, business confidence and household spending patterns.
UK mortgage rates have risen sharply since January, with two-year and five-year fixed rates now at 4.8% and 4.9% respectively. RICS survey data showed homebuyer demand slumping as borrowing costs climbed, and Savills research described the Bank of England as having adopted a “wait and see” posture rather than resuming rate cuts. The combination of rising mortgage costs and elevated energy prices creates exactly the kind of stagflationary squeeze that some forecasters are now naming as the UK’s most likely near-term scenario.
The February GDP growth number, while welcome as a pre-war snapshot, will not change the direction of monetary policy or the Bank of England’s communication. The focus in Threadneedle Street is now entirely on the forward picture: whether ceasefire negotiations produce durable results, whether oil prices retreat below $90 per barrel, and whether business investment decisions being postponed during the uncertainty period begin to materialise as the picture clears.
