UK Economy Grows 0.4 Percent in Second Quarter

The Office for National Statistics reported that the United Kingdom economy grew by 0.4 percent between April and June 2026. This expansion, which included a surprise 0.3 percent increase in June, brought total growth for the first half of the year to 1 percent, marking the strongest start to a year since 2024. Growth was primarily led by the services sector, specifically IT, professional, scientific, and technical industries, as well as hospitality, bolstered by sunny weather and the men's football World Cup.

Chancellor of the Exchequer John Healey stated the UK achieved the fastest growth in the G7 this year. However, he acknowledged that the conflict in the Middle East has added pressure to British businesses and the cost of living. Shadow Chancellor Sir Mel Stride criticized the government, arguing that poor decisions regarding tax and borrowing have stifled growth and left the economy vulnerable to external shocks.

Despite the recent performance, the Bank of England and other economists warn that momentum will likely wane. Factors contributing to this slowdown include a 13 percent rise in the energy price cap and policy uncertainty following the appointment of Andy Burnham as Prime Minister. HM Treasury officials warned that continued disruptions to energy supplies through the Strait of Hormuz could slow annual growth to 0.9 percent this year and 0.3 percent in 2027, with inflation potentially peaking at 4.3 percent early next year.