UK economy showed surprise 0.5% growth before Iran war | Economic growth (GDP)

The UK economy grew by an unexpected 0.5 per cent in February, official figures show, before war in the Middle East dashed hopes for a pick-up in growth this year.

The unusually large increase reported by the Office for National Statistics suggests the economy was gaining momentum before the conflict began. Economists were forecasting an expansion of just 0.1%.

The horizontal line figure for January was also revised as 0.1% growth.

While oil and gas prices rose as a result of the de facto closure of the Strait of Hormuz, economists lowered their forecasts for Britain’s 2026 growth.

Surveys show business and consumer confidence falling sharply, and investors believe interest rates may need to rise to limit the inflationary impact of the war.

Rachel Reeves is in Washington this week to attend the spring meetings of the International Monetary Fund. He expressed frustration with the potential economic impact of the conflict, telling an audience in the US capital on Wednesday that it was a “mistake”.

More details coming soon…