The UK economy grew 0.4 per cent between April and June, official data has revealed, in a sign that businesses and consumers have so far weathered the worst shocks of the war in Iran.<\/p>\n
The growth figure from the Office for National Statistics was in line with analysts\u2019 expectations but came alongside a surprise boost of 0.3 per cent in June, ahead of forecasts.<\/p>\n
Figures for May were revised down from 0.1 per cent growth to no growth.<\/p>\n
City economists polled by Bloomberg had predicted<\/a> that growth in the second quarter would be 0.4 per cent while data for June would show a decline in total product value of 0.1 per cent.\u00a0<\/p>\n The services sector lifted the UK economy in the three-month period, growing by 0.5 per cent. Production was flat with no change from the first quarter while the construction sector struggled to build momentum with an expansion of 0.3 per cent.\u00a0\u00a0<\/p>\n The figures suggest that businesses and consumers have been resilient in the face of price shocks brought on by the war in Iran, which has pushed up oil prices and threatens to fuel inflation later this year. However, analysts warned the economy had enjoyed a boost from one-off events like the World Cup and a series of heatwaves.<\/p>\n Schroders senior economist George Brown recognised that the UK economy had proven to be \u201cresilient\u201d but he added that he suspected \u201cseasonal quirks are flattering activity in the first half of the year, with growth likely to lose some steam later in 2026\u201d.<\/p>\n Yael?Selfin, chief economist at KPMG, said \u201ctemporary tailwinds are likely to fade, and higher prices continue to squeeze households\u2019 purchasing power\u201d.<\/p>\n \u201cGrowth is expected to moderate in the coming months as the impact of higher prices and borrowing costs filter through to households and businesses,\u201d Selfin said.<\/p>\n The growth figures showed that consumers had enjoyed high temperatures and so far dealt with recent economic shocks \u201cremarkably well\u201d, she added. The ONS suggested that \u201csporting events\u201d, likely a reference to the World Cup, boosted spending.<\/p>\n \u201cGrowth slowed in the second quarter of the year, following a strong start to 2026, but remained relatively robust,\u201d Liz McKeown, director of economic statistics at the ONS, said.<\/p>\n Growth in the second quarter of the year is slower than activity recorded in the first three months of the year, when the UK\u2019s official data body said GDP increased by 0.6 per cent.\u00a0<\/p>\n Healey warned about UK economy<\/p>\n The slowdown in output and activity may put the Prime Minister, Andy Burnham, and Chancellor, John Healey, on edge ahead of a difficult Budget.\u00a0<\/p>\n The pair were warned that the UK economy\u2019s future largely depended on President Trump and Iran\u2019s actions across the Middle East and the re-opening of the Strait of Hormuz.\u00a0<\/p>\n According to Bloomberg<\/a>, the top ministers were warned by the Treasury that the UK economy would grow by just 0.3 per cent if the strait remained blocked for the rest of the year. The Bank of England has also said it would raise interest rates if the strait remains blocked for the rest of the year.<\/p>\n Independent forecasters have spelled out similar bleak scenarios for the UK economy.\u00a0<\/p>\n Economists at EY warned that the UK economy could slide into a recession in the scenario where oil and gas fail to leave or pass through the Gulf region, accounting for around a fifth of global supplies.\u00a0<\/p>\n Recent data has shown that government spending has been a large contributor to growth.<\/p>\n Healey will come under pressure from industry chiefs<\/a> to deliver a confidence-boosting Budget against a gloomy backdrop for the UK economy.\u00a0<\/p>\n Devolution is set to be one of the main policies at the Budget, with the Chancellor previously backing regional-led investment bodies to drive growth.\u00a0<\/p>\n But economists at Capital Economics have warned that a smaller fiscal headroom and a number of spending commitments on energy policy support and defence could force him to raise about \u00a325bn in taxes.\u00a0<\/p>\n Reacting to the recent growth print, Chancellor John Healey said: \u201cI know people are worried about the impact of the conflict in the Middle East on their cost of living, which has been too high for too long and it has added pressure on British businesses.<\/p>\n \u201cThis is an active, hands-on government, putting British interests first \u2013 giving breathing space to those feeling the strain, making our country more resilient and bringing hope back<\/p>\n \u201cWe\u2019ve seen the fastest growth in the G7 this year, but we now need to double down and drive growth in every postcode.\u201d<\/p>\n Shadow chancellor Sir Mel Stride said: \u201cOur economy is struggling because Labour have no plan for growth.<\/p>\n \u201cLabour have mismanaged the economy with their tax and borrowing spree, leaving it weak and vulnerable to the effects of shocks like the Iran War.<\/p>\n \u201cYet Andy Burnham is gearing up to tax and borrow even more, doubling down on those failures.\u201d<\/p>\n