We’ve been waiting for a while for the Office for National Statistics to deliver us some good news on the British economy – and today it came.
Output grew by 0.5% in February, up from zero growth in January and higher than the 0.1% forecast by economists.
Some usual caveats apply. Monthly data can be volatile and prone to revision – but it can go up as well as down.
While publishing the latest figures, the ONS also revised up its January figure from -0.1% to zero.
It’s clear that, across the economy, sectors performed robustly.
The big surprise was manufacturing.
Business surveys told us that UK factories were on their knees, anxious about Trump’s tariffs and impending tax rises that came into effect in April.
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Yet the production sector grew by 1.5% – led by pharmaceuticals, metals and transport equipment. Businesses have been resilient.
The chancellor will be pleased, but the celebrations are likely to be fleeting.
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The world has already moved on, with Donald Trump unleashing policy chaos on the global economy.
Britain is now facing a 10% tariff on exports to the US and there will be pockets of acute stress, particularly for our car manufacturers, who have been hit with a 25% tariff.
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They export more to the US than any other country in the world. Indeed, some of the growth in manufacturing may have been driven by businesses rushing to do deals before tariffs came into force.
The tariffs alone on the UK will be painful – but the most significant damage is likely to come from a slowdown in the global economy.
The US and China are engaged in a tit-for-tat trade war and that will have negative spillovers, especially for an open economy like ours. We won’t escape the fallout.
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Businesses here in the UK might curtail hiring and investment in response, their hesitancy compounded by uncertainty over what Donald Trump might do next.
Consumers may also retreat, especially if the pound weakens and imports become more expensive, causing inflationary consequences.
So, while we’ve finally been given something to cheer, darker days beckon. We should enjoy it while it lasts.
