Before the outbreak of the Iran War, the British economy unexpectedly achieved rapid growth

The British economy expanded rapidly in the weeks preceding the outbreak of the Iran War, which clearly demonstrated the significant impact of the conflict in the Middle East on the British economy.

Bloomberg quoted data released by the UK National Statistics Bureau on Thursday (April 16) as saying that the country's gross domestic product (GDP) grew by 0.5% in February. The previous month's data was revised upward to show a growth of 0.1%. This performance was much better than the 0.1% expected by economists and was the strongest monthly increase since January 2024.

The UK's service sector has seen growth for the fourth consecutive month, driving overall activity. Production and the construction sector also expanded in February.

However, since the United States and Israel launched attacks on Iran on February 28th, the sentiment surrounding the British economy has changed rapidly. This event disrupted the energy supply chain and triggered global market turmoil.

"Mixed feelings"

This war may have a greater impact on the UK than on any other major developed economy, pushing up borrowing costs and increasing the pressure on an already struggling government. Economists predict that inflation will soar to nearly twice the target of the Bank of England, while they have significantly lowered the growth expectations for the UK.

The Resolution Foundation, a British think tank, estimates that this energy shock will reduce the actual income of ordinary households by £500.

The British Minister of Trade and Industry, Keel, said in an interview with the BBC: "To be honest, this is a mixed moment because it indicates that before the outbreak of the war in Iran, the fundamentals of our economy were actually moving in the right direction."

He mentioned that before the conflict, productivity rose, inflation decreased and interest rates fell. "These factors were all improving, but now we are facing a series of global uncertainties and new challenges."

The yield on British government bonds dropped by four basis points at the opening, following the trend of European government bonds. The pound rose by 0.1% against the US dollar.

Before the next meeting on April 30th, the policymakers of the Bank of England will have to balance the risks of runaway inflation and economic downturn. The conflict in the Middle East and its impact on global energy supply show no signs of easing, and the current ceasefire between the US and Iran remains fragile.