UK economy surged pre-Iran war, energy shock now looms

London: Britain's economy ​surged unexpectedly in February, suggesting it was in ​slightly better shape before the start of the Iran war than many economists had feared, official figures showed on Thursday.

The Office for National Statistics ‌said gross ⁠domestic product ⁠rose by 0.5% month-on-month in February, the biggest increase since January 2024.

Also Read: UK economy limped into the end of last year before Iran war

Economists ​polled by Reuters had forecast 0.2% growth in gross domestic product for February.

"Growth ​increased further in the three months to February led by broad-based increases across services," ONS chief economist Grant Fitzner said.

"Meanwhile ​car production recovered from the effects ⁠of the autumn ‌cyber incident."

While the data are likely to ​please finance ​minister Rachel Reeves, economists said Britain's economy remained ⁠vulnerable to the fallout from the Middle East conflict, ​being highly dependent on imported natural gas and ​prone to higher inflation than peers.

"Unfortunately, the latest energy price shock has likely pulled the rug on this momentum, with another year of above-target inflation and a softening labour market likely to come," said Fergus Jiminez-England, associate economist from the National ‌Institute for Economic and Social Research.

Economic growth for the three months to February was 0.5%, the ​ONS said, ​putting Britain's economy ⁠on track for a conspicuously strong first quarter, for a third year running.

Also Read: UK's economy ekes out only 0.1% growth in Q4

That pattern has led to suspicions among some economists that ​the ONS' process of seasonal adjustment has gone awry following unusually large swings in output during the COVID-19 pandemic - something the ONS rejects.

"We're confident in our figures and seasonal adjustment processes," an ONS spokesperson said on Thursday.