UK economy grows 0.5% in February, defying tariffs and trade wars
The UK economy experienced an unexpected growth of 0.5% in February, exceeding economist expectations of just 0.1%.
The growth, driven primarily by manufacturing and production, came ahead of the anticipated impact of a 10% tariff on British goods and broader trade war tensions.
According to the Office for National Statistics (ONS), February’s growth reversed the modest dip in January.
As the UK prepares for the full effects of the tariff on goods imported to the US, businesses are facing additional challenges, including a £25 billion rise in taxes and increasing costs from council tax and utility bills.
The surprise growth has set a positive tone as the UK braces for the long-term consequences of the trade war.
The introduction of a 10% tariff on British exports to the US raises concerns about the future of the UK’s export sector and its broader economic outlook. Many economists are now closely monitoring the situation for its potential long-term effects on the UK economy.
Mark McCarthy, Chief Revenue Officer at Basware, commented: “Trade wars and tariff uncertainty introduce volatility into the global economy.
For major enterprises, especially those with complex supply chains or international footprints, this creates hesitation around IT spending.
CIOs and CFOs may want to delay large IT investments, reassess strategic priorities, and scrutinize every dollar of spend.”
McCarthy emphasized that, while some companies may delay investments, they must also focus on achieving greater efficiency and mitigating operational risks.
“Smart enterprises don’t stop investing, they get more focused on their spending and look for greater ROI on every purchase,” he said.
Sarah Breeden, deputy governor for financial stability at the Bank of England, also commented on the potential impact of tariffs.
While it is “too early to call” the full effects of the tariffs on inflation, Breeden warned that trade tensions could hurt business activity and potentially cause further instability in financial markets.
The Bank of England is monitoring the situation closely, with a focus on any signs of panic selling that could undermine confidence in the economy.
As businesses and financial institutions adjust to these new challenges, the broader UK economy will continue to grapple with the uncertainty created by the ongoing trade war and the threat of further tariffs.