UK GDP grows 0.5%, but tariff tensions spell trouble

Lale Akoner, Global Markets Analyst at Investment Platform eToro, says: “The UK economy grew 0.5% in February, with gains across services, production, and construction. But this modest recovery comes amid deepening global trade tensions. The recent escalation of US tariffs, raising costs of most UK exports by at least 10%, adds pressure at a time when Britain is still adjusting to Brexit’s long-term drag on growth, investment, and productivity.

“Zooming out, trade friction between Washington and Brussels could also spill over, hitting UK sectors closely tied to both economies, such as autos and aerospace. British exporters risk being caught between retaliatory measures, reduced demand, and rising costs.

“The government is trying to diversify through new trade deals, such as with India or the Gulf, but these are no quick fix. Meanwhile, many UK firms, particularly SMEs, have pulled back from European markets. Tariffs now represent more than economic headwinds; they’re signals in a global power game. Future GDP prints will give investors a steer on their true impact on the UK economy.”