Reeves: GDP growth is ‘encouraging sign, but we are not complacent’
Chancellor Rachel Reeves has responded to better than expected monthly GDP figures for February. In a statement, she said:
These growth figures are an encouraging sign, but we are not complacent. The world has changed and we have witnessed that change in recent weeks.
I know this is an anxious time for families who are worried about the cost of living and British businesses who are worried about what this change means for them.
This government will remain pragmatic and cool-headed as we seek to secure the best deal with the US that is in our national interest.
At the same time, we will be relentless in our work to kickstart economic growth, provide security for working people and renewal for Britain.
Key events
The UK and Germany are hosting a meeting of 50 nations at Nato’s headquarters in Brussels on Friday. British defence secretary John Healey and his German counterpart, defence minister Boris Pistorius, will co-chair the 27th Ukraine Defence Contact Group, a role previously performed by the US defense secretary until Donald Trump’s return to office.
European allies have announced a “surge” of military support for Ukraine, with the British government unveiling £450m (€516m / $580m) in UK-led aid. The funding will provide repairs and maintenance to vehicles and equipment as well as radar systems, anti-tank mines and hundreds of thousands of drones.
In comments briefed in advance, PA Media reported that Healey would tell the contact group:
The work of the Ukraine Defence Contact Group is vital to put Ukraine in the strongest possible position and pile pressure on Putin to help force him to end this terrible war.
We cannot jeopardise peace by forgetting the war, which is why today’s major package will surge support to Ukraine’s frontline fight. 2025 is the critical year for Ukraine. Our job as defence ministers is to put into the hands of the Ukrainian war fighters what they need. We must step up to deter Russian aggression by continuing to bolster Ukraine’s defences.”
Liberal Democrats say they welcome the move, but described the sums involved as “small change”. Defence spokesperson Helen Maguire said:
While we welcome any increase in support for Ukraine, this package is small change compared to what’s needed to combat Putin’s barbaric war. John Healey is right: 2025 is a critical year. But Britain needs to do more.
The UK must lead the charge in seizing the Russian assets held here in Britain — funnelling oligarchs’ money to back Zelenskyy’s brave defence of Ukraine’s sovereignty. Without that, we risk failing Ukraine in their hour of greatest need.
My colleague Jakub Krupa is following events in Brussels on our Europe live blog.
Incidentally here is the ONS chart of GDP figures from 2007 to the present day, which shows the UK economic growth has essentially picked up a little since May 2023, after a period of post-pandemic stagnation.
You can follow the impact on markets of the GDP news and the latest tariff shenanigans coming out of Washington and Beijing with Kalyeena Makortoff on our business live blog.
Liberal Democrat spokesperson Munira Wilson was asked this morning about how well the party felt the government had been handling the imposition of tariffs on the UK and the broader global economy.
She was challenged by LBC News presenter Vanessa Baffoe whether, given Donald Trump’s sudden climbdown on some of the higher threatened tariffs, the government had been right to delay any immediate retaliation. Wilson told listeners:
Well, the Liberal Democrats have said all along, you’ve got to stand up to a bully. So I think what we want to see the prime minister doing is building an economic coalition of the willing, working with our allies to boost trade elsewhere, whilst the US has proven itself an unreliable partner
And that’s why Liberal Democrats have been consistently calling for the UK Government to work for a stronger and better trade deal with the EU, to cut red tape for our businesses, so that we can be exporting and boosting growth in our economy here with the EU.
The care minister has defended the government’s cautious response to developments in global trade after the sweeping imposition of tariffs by the US administration in Washington.
Stephen Kinnock said “If we were to just jump in one direction or the other every time there’s a new development, we would be jumping around all over the place. I don’t think that that’s going to be in the interest of our economy or of our national security or of our business community.”
Kinnock said he understood that the media “are keen for us to give a running commentary on what president Trump is doing” but argued that “we feel that it’s much better to show that we are acting in the national interest, that we are continuing to be very vigilant.”
He reiterated that “the prime minister has said all options are on the table. And if it does come to the point where retaliation is needed, then we are, of course, ready to do that.”
On Sky News, business correspondent Gurpreet Narwan dsescribed the economic news as “welcome” for the government, but cautioned that this might be “the last growth we see.”
She told viewers that businesses in the UK had faced “crippling tax rises, those national insurance contribution increases coming down the road, [and] confidence is falling” adding that “this feels a bit kind of redundant already, doesn’t it? Because of the week we’ve had, it might be the last growth we see now that Donald Trump has imposed sweeping tariffs on countries across the world.”
She continued “Businesses might be nervous about investing, for example, about hiring, and they still don’t know what Donald Trump is exactly up to. So overall, the outlook for the UK economy is pretty poor because of what Donald Trump is doing in the US.”
On the media round today for the Conservatives was shadow minister for the environment Robbie Moore, who said “of course, we welcome any growth figures” when asked about February’s GDP figures.
However, he expressed concern about the wider direction of the economy, telling Sky News viewers:
This is just for February, and we know that the OBR gave a huge amount of caution as we head into this year, projecting a reduction in growth. And also this is before all of those punitive tax increases kick in this month, like the jobs tax, employers national insurance increases, minimum wage increases, business rates increases.
So of course, we welcome it, but based on a lot of the conversations that I was having literally just yesterday with manufacturing and engineering businesses in my constituency of Keighley, their business certainty is very, very low.
Jamie Grierson is a senior news reporter for the Guardian
A senior economic adviser to Donald Trump has said it would take “an extraordinary deal” for any country, including the UK, to improve on the 10% tariff rate the US has imposed almost worldwide, pouring cold water on Downing Street’s hopes for a breakthrough.
Speaking to CNBC, Kevin Hassett, an economist and adviser to Trump, said any deal that would persuade the president to go below that would need to be “extraordinary”.
“I think everybody expects that the 10% baseline tariff is going to be the baseline,” he said. “It is going to take some kind of extraordinary deal for the president to go below there.”
While the UK is pressing for a reduction in tariffs through a trade deal, Downing Street has stressed throughout that the world has changed and the UK must also pursue other avenues for economic growth and agreements with other partners.
Read more from Jamie Grierson here: Trump’s economic adviser dampens Starmer’s hopes of tariffs relief
Speaking on LBC News, Liberal Democrat education spokesperson Munira Wilson welcomed what she described as “these green shoots of recovery” after GDP rose 0.5% in February, but said growth “risks being choked off because of the jobs tax”, in a reference to rising employer national insurance contributions.
Wilson warned that “additional cost, both in terms of national insurance rises and with business rates increasing on our high streets, is stifling growth. And that means less money going to the chancellor that can then be spent on rebuilding our broken public services, like our schools and hospitals.”
Stride: 0.5% GDP rise shows Labour have ‘killed growth stone dead’
Responding to news that the economy had grown by 0.5%, shadow chancellor Mel Stride said “Since coming to office, Labour’s choices have killed growth stone dead.”
The shadow chancellor asserted that there was “still a long way to go to recover.”
Referring to chancellor Rachel Reeves’ spring statement, he said “At the emergency budget, the forecasts for growth, inflation and borrowing all moved in the wrong direction because of Labour’s decisions. Hardworking families deserve better than a Government crowing about sluggish growth whilst they will be £3,500 worse off because of the jobs tax.”
Reeves: GDP growth is ‘encouraging sign, but we are not complacent’
Chancellor Rachel Reeves has responded to better than expected monthly GDP figures for February. In a statement, she said:
These growth figures are an encouraging sign, but we are not complacent. The world has changed and we have witnessed that change in recent weeks.
I know this is an anxious time for families who are worried about the cost of living and British businesses who are worried about what this change means for them.
This government will remain pragmatic and cool-headed as we seek to secure the best deal with the US that is in our national interest.
At the same time, we will be relentless in our work to kickstart economic growth, provide security for working people and renewal for Britain.
UK economy grows by 0.5% but tariff war impact yet to come
Phillip Inman
Phillip Inman is an economics writer for the Guardian
The UK economy unexpectedly expanded by 0.5% in February, according to official figures, in a boost for Rachel Reeves before an expected downturn triggered by Donald Trump’s tariff war.
Reversing a modest fall in January, the increase in gross domestic product in February could mark the last period of expansion before the threat of a global trade war dampens business investment and consumer spending.
A poll of economists had expected the economy to grow by 0.1% in February.
This month, consumers face inflation-busting utility bill and council tax increases while employers must cope with £25bn of tax rises.
Government critics are expected to accuse ministers of presiding over a long period of stagnation induced by last October’s tax-rising budget.
Kinnock: growth figures show ‘the dividend from a government that is stable’
Care minister Stephen Kinnock has said that higher than expected GDP growth figures for February are “the dividend from a government that is stable”.
Speaking on Sky News, the Labour MP for Aberafan Maesteg said:
I think what we’re seeing is the dividend from a government that is stable, is focused on our growth mission, and is absolutely committed to supporting businesses across the country in terms of getting investment in and giving them the certainty they need.
He continued, telling viewers that the government was “freeing up planning so that can unleash businesses to invest,” and said that Labour were introducing “new rights for employees, which will, I think, really help to get a better relationship between employers and employees going across the economy.”
He also boasted of Labour’s increases to minimum wage rates, saying:
We’re seeing the rise in the living wage, which I think is also helping to put more money into the economy, giving consumers more confidence. That mixture of supply side and demand side measures are really helping to build an economy that is fit for the future.
Welcome and opening summary …
Good morning, and welcome to our rolling UK political coverage for Friday. Here are your headlines …
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The UK economy unexpectedly expanded by 0.5% in February, according to official figures, in a boost for Rachel Reeves before an expected downturn triggered by Donald Trump’s tariff war
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The chancellor said “These growth figures are an encouraging sign, but we are not complacent”. Shadow chancellor Mel Stride said the rise showed that growth had been killed “stone dead”
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Keir Starmer has said he has still not spoken to the US president since he brought in trade tariffs which have destabilised the global economy
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A record fine over freedom of speech breaches at the University of Sussex has sparked wider anxiety in the sector
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The UK and Germany are co-chairing a meeting in Brussels over support for Ukraine. The government has announced a £450m “surge” of military support to Ukraine
Parliament is in recess, but there will be some local campaigning for the council elections in England scheduled for next month, including Liberal Democrat leader Ed Davey visiting the River Severn in Shrewsbury. The funeral of former Scottish government minister Christina McKelvie is due to take place in Glasgow.
It is Martin Belam with you today. You can reach me at martin.belam@theguardian.com if you have spotted typos or what you consider to be errors or omissions, or you have questions.