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
Reeves: government needs to go ‘further and faster’ to deliver growth ‘that is felt by families’
Rachel Reeves has said that the government needs to go “further and faster on delivering growth that is felt by families up and down the country”, and said the Starmer administration was “resolved to do everything we can” to obtain a favourable trade deal with the US in the wake of Donald Trump’s unilateral imposition of 10% tariffs on the UK.
In comments to broadcasters after February’s GDP figures showed higher-than-expected growth of 0.5%, the Chancellor said:
It is welcome news that the economy grew strongly in February and, of course, the numbers as well for January were revised up. But we do know that we need to go further and faster on delivering growth that is felt by families up and down the country.
So, we are not complacent about these numbers, there is more work to be done. Which is why we are reforming regulation, reforming our planning system to ensure that we can get Britain building and continue to grow our economy.
Reeves also spoke about the government’s ambition for a trade deal with the US, saying:
We continue to engage with our counterparts in the United States, and of course we want to secure the best deal possible for British jobs and British industry. And we are absolutely … resolved to do everything we can.
But, at the same time, we also want to improve trading relations with other countries around the world.
It’s why I hosted the Indian finance minister in London this week as part of our economic and financial dialogue, and to try and secure a free trade and investment treaty with India.
It’s also why we are having a summit with the European Union in May to improve our trading relations. I’ll be travelling to Poland later today to meet with my finance minister counterparts from across Europe.
The increase in gross domestic product in February was five times larger than the 0.1% that a poll of economists had forecast, while January’s figure of a fall of 0.1% was revised up to 0.0% growth. The Office for National Statistics said UK growth was across all sectors of the economy.
Responding to news that the economy had grown by 0.5%, Conservative shadow chancellor Mel Stride said “Since coming to office, Labour’s choices have killed growth stone dead.”
Liberal Democrat education spokesperson Munira Wilson welcomed what she described as “these green shoots of recovery”, but cautioned that tax decisions taken by Reeves risked growth being “choked off”.
It may be ever thus that governments claim small rises in GDP are a direct result of their policies, and that small dips are a result of global factors out of their control, but the Spectator’s Ross Clark has conceded “Reeves manages to grow the economy” in the magazine’s economics newsletter today. He writes:
Just when everyone seems to be revising down expectations of growth, real world data starts pointing in the opposite direction. The Office for National Statistics estimates this morning that GDP grew by 0.5 per cent in February. It also revised January’s figures upwards to give growth for the last quarter of 0.6 per cent, and annual growth of 1.4 per cent. That is almost looking healthy. For the moment, the Reeves Recession has been put on hold.
Yet these figures do look somewhat historic. They cover a period before the national insurance increases for employers took effect and, of course, before Donald Trump’s ‘Liberation Day’ turned global markets upside down. We won’t know the effect of tariffs for at least a couple of months.
No one will be happier with this morning’s figures than the Chancellor. The immediate threat to her position appears to have receded significantly. Besides the renewed growth in the UK economy, the focus of economic news has moved away from Britain’s performance and on to turmoil in the global economy. In the space of a month Britain has gone from looking the sick man of the developed world to being a relative haven of calm.
While he was on the media round this morning, Conservative shadow minister for the environment Robbie Moore was pressed on how secure Kemi Badenoch was as opposition leader. This follows a report in the Times claiming Conservative donors are withholding backing for the party over concerns about her leadership and scepticism that she can see off the threat of voters shifting to support Reform UK.
Moore told Sky News viewers “Well, look, we’ve undoubtedly, as the Conservative party, had one of the biggest bruising general elections. We all know that, and it takes time to build back our base, build back that level of trust and support that we need from the wider electorate.”
He said Badenoch was providing “strong leadership” and they were a united parliamentary party with “plenty of fire in our belly and plenty of enthusiasm.”
Asked about the prospect of another Conservative leadership election before the year was out, Moore said “absolutely not” and that the party was “united” in holding the Labour government account under Badenoch’s leadership. He said:
We are not only having the task of holding this government to account and making sure that they are focusing on things that matter to our many hard working families and businesses across the UK, but also having to develop that relationship and that trust with the electorate that we lost at the general election. And of course, of course, that takes time.
In the article published overnight in the Times, Aubrey Allegretti, formerly of this parish, quoted anonymous shadow cabinet ministers who, he reported, said donors were holding out to see the results of the forthcoming local elections in England.
One was quoted as saying “My lot are waiting for evidence that their money will actually buy influence. It’s not clear how long she’ll last, and whether our party has learned to stop defenestrating leaders,” while another said “Some colleagues haven’t given up on leadership ambitions, and are keeping their donors to themselves for now because they sense she’ll be ousted next year.”
Under a revamp of the leadership rules, Badenoch is immune from a vote of no confidence until November, which will mark a year since she was elected by party members in a contest with Robert Jenrick.
Care minister Stephen Kinnock has told viewers of Sky News that “my heart goes out to steelworkers and their families and communities in Scunthorpe that are facing very challenging times.”
He said “It’s absolutely clear that we’re focused on getting a commercial deal with Jingye, the owners of the Scunthorpe steelworks. That commercial deal, I think can put the steelworks on a solid footing to ensure that it’s competitive and viable.”
He said:
Steel is an absolutely vital foundational industry for our economy, for our national security. And this government is committed to building a strong steel industry after many years of neglect from our Conservative predecessors. And we will ensure that happens.
But the right way forward is for a commercial deal, so that you have a business managing in a fast moving market, a highly competitive market. That is what’s best for the future of the steel industry, and that is the deal, that partnership, is what we need to build.
On Thursday, ministers were thought to have offered to provide funding for the purchase of raw materials such as iron ore and coking coal for Scunthorpe’s blast furnaces, with the government under mounting pressure to nationalise British Steel.
As well as making that call just now for Keir Starmer to call a summit over Trump’s trade tariffs, Liberal Democrat leader Ed Davey will be making a campaign visit to the River Severn later today, and the party has been pushing its campaign about water quality.
Speaking on LBC News this morning, spokesperson Munira Wilson said the Labour government had “taken some steps forward” but said it had not gone far enough.
Criticising what she described as “years of frankly neglect of our rivers and seas by the previous Conservative government”, she told listeners:
I don’t think the Labour government has gone far enough with their new legislation. We know that Ofwat as a water regulator is totally discredited. It doesn’t have the teeth to take action. So I think we need a new regulator with teeth that will actually be able to crack down on this disgrace. Because I think the public are shocked to see this disgusting sewage going into our precious waters and seas, day after day, month after month, year after year.
Liberal Democrat analysis of data claimed that the top ten longest sewage spills last year included one single sewage dump from South West Water into Salcombe Regis Stream lasting for 366 days due to the leap year.
The party is calling for a ban on bonuses for water company bosses, asserting that water company executives received over £20m in total last year – including basic pay, pension contributions and bonuses.
Davey calls on Starmer to hold ‘summit of world leaders’ over ‘Trump’s nonsensical economic policies’
Ed Davey has called on the prime minister to hold a summit of world leaders to work out a unified response to what the Liberal Democrat leader called “Donald Trump’s nonsensical economic policies.”
Davey also criticised the positions taken by Conservative opposition party leader Kemi Badenoch, and Reform UK’s Nigel Farage, the MP for Clacton.
The Liberal Democrat leader said:
Donald Trump’s nonsensical economic policies have thrown the world economy into crisis and put thousands of British jobs at risk. Now is not the time for complacency.
The prime minister should show the White House that we have alternatives by hosting a summit of world leaders and building an economic coalition of the willing.
Both Kemi Badenoch and Nigel Farage want the UK to go cap in hand to Trump and beg him for a trade deal. That is not the way to stand up for Britain or our national interest.
We need to show a united front and put pressure on the US to not just make this 90-day pause permanent, but remove their remaining tariffs on British businesses and our car industry completely.
The best way to end this trade war for good is by standing tall with our allies, not cowering in the corner.
Earlier today, speaking on Sky News, care minister Stephen Kinnock said the government was still pursuing a trade deal with Washington.
He told viewers “Things change all the time, so I think it’s best for us to stay focused on the fact that we have that objective of getting a trade deal with the US and [Business secretary] Johnny Reynolds and the prime minister and other colleagues are very focused on getting that deal.
“But of course, we also have to be prepared for the eventuality that we don’t get it immediately, or that it takes some time to come, and what that means is we’ve got to build a UK that stands strongly on its own two feet.”
Chancellor Rachel Reeves is expected in Poland today for informal discussions with her counterparts in the EU.
Ahead of her visit, a spokesperson for the Treasury said “the chancellor will be travelling to Warsaw to make the case for deeper defence financing cooperation with our European allies so together we deliver greater economic and national security in a changed world.”
Earlier, while appearing on Sky News, care minister Stephen Kinnock said the government was intent on “rebuilding our relations with our European partners and allies” which he said had been “so badly damaged after years of Conservative failure and incompetence.”
He told viewers that the government aimed for good deals with all major trading partners, saying “We hope [for] a good trade deal with the US [and] a removal of friction in terms of relations with the EU. You know, let’s not forget, the EU is still, by some margin, our most important trading partner. And so that combination of getting the trade policies right, along with an industrial strategy that builds our own capability, is the right way to go.”
Veteran Labour MP Diane Abbott has criticised the government for its spending priorities, after the announcement that the UK was to provide an additional £450m in support for Ukraine in its war effort against Vladimir Putin’s Russia.
Posting to social media, the 71-year-old, who has been an MP since 1987, said “There is plenty of money for war, just not for the winter fuel allowance.”
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.
