While the British economy outperformed expectations in February, analysts warn the growth surge appears unsustainable amid persistent domestic and international challenges.

On April 11, Britain's Office for National Statistics reported that the British economy expanded by 0.5 percent month-on-month in February, surpassing the market forecast of 0.1 percent. Growth was broad-based, with the services sector rising by 0.3 percent month-on-month, manufacturing by 1.5 percent and construction by 0.4 percent.

Britain recorded its fastest monthly economic growth since the Labor Party took office in July 2024. The Labor Party has consistently prioritized growth as its top mission. Chancellor of the Exchequer Rachel Reeves welcomed the data as an encouraging signal but said that the government will not stop at it.

Although manufacturing represents a small share of the British economy, it became a key driver of February's stronger-than-expected growth. The sector grew by 1.5 percent month-on-month in February, rebounding from a 0.5 percent contraction in January. Ten of the 13 manufacturing subsectors posted gains, among which the manufacturing of computers, electronics and optical products increased by 9.8 percent month-on-month.

February's surge in Britain's manufacturing was related to foreign trade enterprises racing to boost exports to the United States ahead of anticipated tariffs. Official data shows Britain's goods exports to the United States jumped by 500 million pounds (about 654 million U.S. dollars) that month.

"There are clear signs that UK firms increased goods exports to the United States ahead of the introduction of tariffs. Data for the past three months showed a 23-percent increase in the value of goods flowing from the UK across the Atlantic," said William Bain, head of trade policy at the British Chambers of Commerce (BCC).

While February's economic expansion significantly beat forecasts, British analysts remained cautious. Industry institutions and research bodies widely viewed the growth as unsustainable, citing domestic and global challenges.

"The stronger-than-expected GDP rebound in February is welcome news. However, businesses across the UK are under no illusion -- significant sustained growth continues to remain elusive," said Stuart Morrison, research director at the BCC.

Britain's recent policy changes have significantly increased operational pressures on businesses. The April fiscal measures raised the national insurance tax rate for employers and boosted minimum wages, substantially elevating labor costs across industries. The measures have discouraged corporate investment and dampened economic growth.

The BCC's quarterly survey of over 5,000 enterprises reveals declining hiring momentum in the first quarter of this year. Only 20 percent of surveyed firms increased their workforce, down from 24 percent in the fourth quarter of last year, while 17 percent clearly stated they had reduced staff numbers.

"Firms are struggling under the weight of skills shortages, recruitment difficulties and spiraling employment costs. There are signs of businesses pausing recruitment plans, scaling back training investment, and, in some cases, reducing the size of the workforce. The likely impact on job opportunities and business growth is worrying," said Jane Gratton, deputy director of Public Policy at the BCC.

From an international perspective, the U.S. tariff measures will directly affect Britain's exports and broader economic growth. The United States is the largest single export market for British export enterprises. America's 25-percent duty on automotive imports, in addition to a 10-percent baseline tariff, creates particularly unfavorable conditions for British exporters.

This policy shift has already prompted downward revisions to growth forecasts. While Britain's Office for Budget Responsibility projected a 1- percent economic expansion for 2025 in its March 26 estimate, post-tariff assessments from leading institutions including KPMG and the BCC now anticipate growth of just 0.8 percent. Moreover, the uncertainty of U.S. policy has introduced additional cost pressures for British businesses, further constraining economic activity.

Despite its better-than-expected performance in February, the British economy "remains on fragile footing against the backdrop of global volatility and domestic headwinds," said Hailey Low, associate economist at the National Institute of Economic and Social Research.