UK Economy Strengthens, Signals of Slowdown in 2026 Remain
The UK economy recorded growth in February, exceeding market expectations, according to data from the Office for National Statistics (ONS) released Thursday (April 16). This performance follows January's upwardly revised growth, reinforcing signs that activity at the start of the year remains resilient.
The gains were fairly widespread. Services activity rose 0.5% (m/m), industrial production rose 0.5% (m/m), and construction output jumped 1.0% (m/m) despite wetter-than-usual February weather. Several energy-intensive sectors recorded sharp increases, including mining and quarrying (+3.9%), while wholesale-retail trade (+0.7%), transport-warehousing (+0.4%), and arts-entertainment-recreation (+2.0%). Conversely, accommodation and food fell 0.3%, and manufacturing (+0.1%).
Capital Economics assesses that these February results have the potential to push first-quarter GDP growth to around 0.6% (q/q), up from the previous estimate of 0.3%. However, they still expect UK growth to slow in 2026 to around 0.7% from 1.4% in 2025, due to the impact of rising energy prices related to the Iran war. March's PMI also indicated a slowdown in activity, with a worst-case scenario that could push 2026 growth to 0.3%, compared to the pre-war projection of 1.0%. (Arl)
Source: Newsmaker.id
