UK Economy Growth Reaches 0.4%
The UK economy grew by 0.4% between April and June, according to the Office for National Statistics (ONS), with the UK economy growth rate supported by stronger activity in several sectors, warm weather and major sporting events.
The latest UK economy growth figures matched market expectations but represented a slowdown from the 0.6% expansion recorded during the first three months of the year.
The ONS described the performance as “relatively robust”, noting that the UK’s economy had grown faster than those of other G7 countries so far this year. However, economists warned that the recent UK economy growth rate may be difficult to maintain through the rest of 2026.
Summer Weather and Football Boost Growth
Several industries contributed to UK economy growth during the second quarter, including computer programming, advertising and pharmaceuticals. Their contribution was partly offset by declines in power generation and sewerage.
Economic output increased by 0.3% in June alone. The ONS said some businesses reported that good weather and sporting events may have had a positive effect on activity.
Hospitality businesses benefited from increased customer numbers as venues attracted football fans watching the men’s World Cup, which began in June. Several periods of hot weather also provided support for parts of the economy.
However, the UK economy growth picture was less positive in May. The ONS revised its previous estimate of 0.1% monthly growth down to zero.
Despite the slowdown, the UK economy was 1.2% larger than it had been a year earlier, showing that overall UK economy growth has remained positive despite significant economic and political uncertainty.
Economists Warn Growth Could Slow
Fergus Jimenez-England, an associate economist at the National Institute of Economic and Social Research, said Britain had handled the recent energy shock better than many had feared.
However, he warned that the current pace of UK economy growth was unlikely to continue. Inflation and unemployment are expected to rise in the coming months, while fragile business confidence could weaken further if energy prices remain volatile because of the continuing conflict in the Middle East.
“The economy has shown welcome resilience so far, but we are not out of the woods yet,” he said.
Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales, said households and businesses had largely absorbed the economic shock caused by the Iran conflict.
However, he argued that much of the recent UK economy growth had been driven by temporary factors and warned that a more significant slowdown could follow.
Thiru said weaker growth would make Chancellor John Healey’s first Budget in October more challenging.
Energy Prices Remain a Concern
Energy and raw material prices remain an important factor in the outlook for particularly for manufacturers and other businesses exposed to international supply disruptions
Matt Harwood, director of Clarity Plastics, which operates plastic injection moulding sites in Birmingham and Telford, said the company initially faced higher prices and reduced availability of materials after the conflict began.
“When the Iran war started, availability went down and prices went up,” he said. “However, we’re seeing that kind of level out now, and prices coming back to the kind of the normal levels again.”
Harwood said Clarity Plastics had responded by continuing to invest, including installing a large 1,500-ton machine that he believes will give the company a competitive advantage.
Government Under Pressure to Deliver Growth
The latest UK economy growth figures come as the government faces pressure to strengthen the country’s economic performance.
On Wednesday, it emerged that Prime Minister Andy Burnham had been warned by the Treasury that the economy could grow by only 0.9% this year and potentially as little as 0.3% in 2027 if disruption in the Strait of Hormuz continues.
Chancellor John Healey acknowledged concerns about the effect of the Middle East conflict on household finances and British businesses.
“I 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,” he said.
Healey said the government wanted to make Britain more resilient and drive economic growth across every part of the country.
Opposition Criticises Economic Performance UK economy growth
Opposition parties attacked the government’s economic record following the publication of the UK economy growth figures.
Shadow chancellor Sir Mel Stride accused Labour of weakening the economy through increased taxes and borrowing, arguing that its policies had left Britain more vulnerable to external shocks.
“Labour need to realise that it’s their poor decisions which have stifled growth and made the cost of living worse,” he said.
Liberal Democrat Treasury spokesperson Daisy Cooper also said there was little to celebrate in the latest figures. She urged the government to pursue policies designed to strengthen economic growth, including a new trade agreement with the European Union and closer integration with the EU Single Market.
UK Economy Growth Outlook Remains Uncertain UK economy growth
The latest data shows that UK economy growth has remained positive despite significant geopolitical and economic pressures. However, economists remain cautious because some of the factors supporting second-quarter growth are temporary.
Rising inflation, increasing unemployment, fragile business confidence and continued uncertainty over energy prices could weigh on the economy during the coming months.
If disruption around the Strait of Hormuz continues, the UK economy growth outlook could become even weaker. The government therefore faces a difficult challenge in maintaining momentum while protecting households and businesses from further economic shocks.