Business groups say companies still need support after official figures showed the º£½ÇÊÓƵ economy was still almost 8% lower than levels recorded before the pandemic.
The Office for National Statistics (ONS) said gross domestic product (GDP) grew by 0.4% in February, which represented an improvement from a 2.2% decline in January.
But the February reading was slightly below the forecasts of some analysts, with experts at Investec predicting a 0.7% improvement for the month.
The construction sector saw activity jump by 1.6% for the month amid a lift in new work and maintenance. Production and manufacturing activity also improved, with the two sectors revealing 1% and 1.3% improvements respectively.
But the service sector remained particularly constrained, reporting just 0.2% growth, as hospitality and retail remained constrained by pandemic restrictions.
The figures also revealed that exports to the EU increased by £3.7bn – or 46.6% – following a record slump of £5.7bn in January.
The ONS said the export increases were driven by machinery, transport equipment and chemicals. The import of goods from the EU also rebounded, increasing by £1.2bn – or 7.3% – in February.
Suren Thiru, head of economics at the British Chamber of Commerce, said: “The release of pent-up demand following the easing of restrictions and the strong vaccine rollout will boost activity. However, hope of a sustained consumer-led revival may prove too optimistic as the economic scarring caused by Covid may trigger a renewed reluctance to spend as government support winds down.
“Although there was a rebound in º£½ÇÊÓƵ goods exports with the EU, this may reflect an unwinding of a number of temporary factors that weighed on the January outturn, including the running down of pre-Brexit stockpiling, rather than evidence of an underlying improvement in º£½ÇÊÓƵ-EU trade flows.
“Businesses continue to encounter significant disruption and difficulty with many firms reporting serious structural issues which, if not addressed, will weigh on º£½ÇÊÓƵ economic prospects for some time to come.â€
Federation of Small Businesses chairman Mike Cherry said: “If you’d asked small business owners at this time last year about Covid-linked disruption they wouldn’t have dreamed it would be continuing so far into the future.
“These stark figures are a reminder that this lockdown needs to be the last: better to unlock more slowly than to rush and have a repeat of the damaging chaos suffered in the run-up to last year’s critical festive trading season.
“Small business confidence has now rebounded but a sizeable share of employers are concerned about redundancies with the job retention scheme winding down over the coming months.
“The Government should now turn to its build back better agenda: cutting the non-wage costs of employment to spur hiring, ending a debilitating late payment crisis that has worsened through lockdowns, and taking innovative approaches to emergency debt to realise meaningful economic value.â€
