February economic snapshot
A February 2026 economic update describes a mixed picture heading into the spring forecast — growth, inflation and labour signals that could all sway near‑term demand forecasts and cost assumptions. Finance teams should treat this as a reminder to validate macro assumptions in their scenario models. (commonslibrary.parliament.uk)
Q4 2025 GDP expanded by just 0.1% quarter‑on‑quarter, with manufacturing up 0.9%, services output flat and construction contracting 2.1% — its largest quarterly fall since Q3 2021. (commonslibrary.parliament.uk) The UK economy grew 1.3% in real terms over 2025 versus 1.1% in 2024, coming in below the OBR’s 2025 forecast of 1.5% while the OBR’s spring 2026 projection is for 1.4% and the average independent forecaster expects 1.1% in 2026. (commonslibrary.parliament.uk) Unemployment in the three months to December reached 1.9 million (5.2%), a rise of 330,000 on the year and the highest headline rate since late‑2020, while 16–24‑year‑olds saw 739,000 unemployed (a 16% rate), the worst for that cohort since 2015. (commonslibrary.parliament.uk) Headline CPI inflation eased to 3.0% in the 12 months to January 2026 (down from 3.4% in December), with CPIH at 3.2%, even as the Bank of England maintained Bank Rate at 3.75% (a 5–4 MPC vote) and signalled that inflation is expected to return toward the 2% target from April. (ons.gov.uk) Business investment fell 2.7% in Q4 2025 despite rising 3.5% over the year, household consumption rose 0.2% in Q4, exports fell 0.6% and imports rose 0.8% — a mix that left aggregate demand weak but with offsetting pockets of activity across sectors. (commonslibrary.parliament.uk) Policy and cost drivers cited in the briefing include a 16.3% April 2025 rise in the National Minimum Wage for 18–20 year‑olds and an announced 8.5% increase for April 2026, while the OBR’s spring forecast update on 3 March will reset government growth and fiscal assumptions. (commonslibrary.parliament.uk)
