By Lindsay James, investment strategist at Quilter

The UK economy confounded expectations today with economic growth of 0.5% in February and across the three months from December.

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Expectations had been for a sluggish start to 2026 for the UK economy as it battles against low productivity and a struggling labour market.

Today’s figures also came with a revision of January’s figures, upgrading them to 0.3%, giving us a total of 0.8% year to date. Without any context, this is a positive start, although we saw a similar false dawn last year.

The big difference this time is the outlook remains so uncertain. Today’s growth figures only consider the first few days of the US-Iran conflict, and therefore, the true fallout is yet to be felt. 2026 was supposed to be the year the government was hoping to build on following a challenging first 18 months in power, but there is a chance all that work may have just been undone by events out of Labour’s control.

Forecasts are for far worse growth figures to come as inflation spikes and rising energy bills hit........

© LBC