UK Economy Grows, IMF Warns War Fallout

This growth follows an upwardly revised 0.1% expansion in January, defying initial ONS estimates of no growth. However, this positive short-term performance contrasts sharply with a stark economic outlook report from the International Monetary Fund (IMF) earlier this week.

The IMF forecasts the UK will experience the biggest growth downgrade among G7 countries for 2026, projecting 0.8% growth, down from 1.3% predicted in January, primarily due to the Iran war and soaring energy costs. Chief Secretary to the Treasury, James Murray, highlighted government efforts to boost competitiveness and cut energy bills for 10,000 British businesses by up to 25%.

Shadow Chancellor Sir Mel Stride criticized the government's preparedness for the energy shock. ONS Chief Economist Grant Fitzner attributed February's growth to broad-based increases across services, including wholesaling, market research, hospitality, and publishing, with car production also recovering.

Experts like PwC's Barret Kupelian warn that geopolitics and sustained high energy costs will feed into prices, margins, and ultimately, growth. RSM UK's Thomas Pugh suggests the Bank of England will hold interest rates in April due to heightened uncertainty, despite stronger growth.