UK’s unexpected economic rebound boosts govt amid Trump tariffs

LONDON: Britain’s economy grew far more than expected in February, official data showed Friday, in a rare piece of good news for the Labour government as it grapples with unpredictable US tariffs.

Gross domestic product rose 0.5 per cent in the month, rebounding from an upwardly revised figure of zero percent growth in January, the Office for National Statistics (ONS) said. The government has struggled to kickstart growth since it came to power in July, with the recent pick up in the economy coming just before US President Donald Trump’s tariffs threatened to hamper global growth.

Fresh economic headwinds and stubborn inflation led the UK to recently halve its 2025 growth forecast. But Friday’s figures exceeded economists’ expectations of a much smaller 0.1 per cent increase in GDP in February.

In another boost, the ONS also revised its figures from January to zero percent growth, up from a 0.1 per cent contraction. “These growth figures are an encouraging sign, but we are not complacent,” finance minister Rachel Reeves said.

“The world has changed, and we have witnessed that change in recent weeks,” she added, as Trump’s sweeping stop-start tariffs roil global markets. Analysts warn that the 10 per cent levy on US imports of British goods could further weaken business and consumer sentiment.

Specific industries such as auto, steel and aluminium face even steeper tariffs of as high as 25 per cent. “I know this is an anxious time for families who are worried about the cost of living and British businesses who are worried about what this change means for them,” Reeves said.

Prime Minister Keir Starmer on Monday loosened electric vehicle targets for carmakers impacted by tariffs in order to “shelter British business from the storm”.

‘Precarious position’

“The UK is in somewhat of a precarious position right now, caught in the crossfire of the constantly changing economic policy of the US,” said Marcus Brookes, chief investment officer at Quilter Investors.

“The government will need to think creatively and find some quick wins in order to sustain this positive reading and negate the economic impact tariffs will bring,” he added. Under the strain of tight public finances, Reeves recently announced billions of pounds of spending cuts, including to disability welfare payments, in the hopes of shoring up the public purse.

ONS director of economic statistics Liz McKeown noted that there was “widespread growth across both services and manufacturing industries,” in February. “Across the last three months as a whole, the economy also grew strongly with broad-based growth across services industries,” she added.