How fast is the UK's economy growing and what is GDP?

The UK's economy grew by more than expected at a rate of 0.5% in February, according to the latest official figures.

The strength of the economy affects things like pay increases for workers and the amount of tax the government can raise to pay for services.

GDP stands for gross domestic product, and is a measure of all the economic activity of companies, governments, and people in a country.

In the UK, the Office for National Statistics (ONS) publishes new GDP figures every month. However, quarterly figures - covering three months at a time - are considered more important.

Most economists, politicians, and businesses like to see GDP rising steadily.

That's because it usually means people are spending more, extra jobs are created, more tax is paid, and workers get better pay rises.

When GDP is falling, it means the economy is shrinking - which can be bad news for businesses and workers.

If GDP falls for two quarters in a row, that is known as a recession, which can lead to pay freezes and job losses.

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Many economists and politicians have been concerned for some time that the UK's economy is not growing fast enough. When the Labour government took power last year, it made economic growth its top priority.

The economy fell into the recession at the end of 2023 but rebounded in the first half of last year.

Since then, however, growth has been sluggish, although the economy grew faster then expected in February this year, partly due to companies ramping up exports to the US ahead of the imposition of trade tariffs.

The disruption and uncertainty caused by US trade tariffs is expected to hit growth globally this year, even though the US has recently reached a narrow tariff deal with the UK and paused some of the tariffs on China.

In April, the International Monetary Fund cut its forecast for global growth and reduced its forecast for the UK this year to 1.1% from 1.6%.

This was close to the 1% growth forecast that the Office for Budget Responsibility (OBR) - which monitors the government's spending plans and performance – had made for the UK in March.

Economic forecasts are not always accurate, but predictions from organisations such as the IMF and OBR are looked at closely.

If GDP is going up steadily, people pay more in tax because they're earning and spending more.

This means more money for the government, which it can choose to spend on public services, such as schools, police and hospitals.

When the economy shrinks and a country goes into recession, these things can go into reverse.

Governments tend to get less money in tax, which means they may decide to freeze or cut public spending, or put taxes up.

In 2020, the Covid pandemic caused the most severe UK recession for more than 300 years, which forced the government to borrow hundreds of billions of pounds to support the economy.

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GDP can be measured in three ways:

• Output: The total value of the goods and services produced by all sectors of the economy - agriculture, manufacturing, energy, construction, the service sector and government
• Expenditure: The value of goods and services bought by households and by government, investment in machinery and buildings - this also includes the value of exports, minus imports
• Income: The value of the income generated, mostly in terms of profits and wages

In the UK, the ONS publishes one single measure of GDP, which is calculated using all three measurements.

But early estimates mainly use the output measure, using data collected from thousands of companies.

The UK produces one of the quickest estimates of GDP of the major economies, about 40 days after the quarter in question.

At that stage, only about 60% of the data is available, so the figure is revised as more information comes in.

The ONS publishes more information about this on its website.

GDP doesn't tell the whole story:

• The hidden economy: unpaid work such as caring for children or elderly relatives isn't captured
• Inequality: rising GDP could result from the richest getting richer, rather than everyone becoming better off, and some people could be worse off
• Living standards: if the population is also growing, increased GDP can still mean less money per person, which can reduce people's living standards. This is why the GDP per capita measure is important

Some critics also argue that GDP doesn't take into account whether the economic growth it measures is sustainable, or the environmental damage it might do.

Alternative measures have been developed which try to capture this.

Since 2010, the ONS has also measured well-being alongside economic growth. This assesses health, relationships, education and skills, as well as people's personal finances and the environment.

But despite its limitations, GDP is still the most widely-used measure for most government decisions and international comparisons.