Relevance: New UK GDP data shows less-than-expected shock from Iran and energy price hikes. Combined with UK bond yields increasing in relative attractiveness due to volatility in the US and Japan, this provides additional fiscal headroom before the Autumn Statement and its budgetary consequences. Note that the ONS reports figures for the quarter itself; this would be 1.6% SAAR if it were like the BEA in the US. Year-over-year growth is 1.2% and 1.0% on a per capita basis.
> The UK economy grew by 0.4 per cent in the second quarter, a relatively robust performance that suggests businesses are weathering threats including the Gulf-related surge in energy prices. Thursday’s figure from the Office for National Statistics was in line with analysts’ forecasts and compared with a growth rate of 0.6 per cent in the previous three-month period. In the month of June alone, GDP grew 0.3 per cent, following zero growth in May 2026 — a downward revision from the previous increase of 0.1 per cent for that month.
> The figures will come as a relief to Andy Burnham, the new prime minister, as he pledges to broaden growth across more of the country and tackle the cost of living crisis. The UK economy is expected to expand by 1.1 per cent this year, according to the Bank of England’s latest forecasts, marginally below the 1.3 per cent pace recorded for 2025. Nevertheless, rising inflation is set to take a toll on households’ real incomes this year, with the BoE predicting inflation will rise from 2.6 per cent to 3.2 per cent towards the end of the year. Meanwhile, the Iran war continues to threaten the economy. Internal UK Treasury scenarios suggest that if the Strait of Hormuz remains badly disrupted until the end of the year, growth in 2027 could be dragged down to just 0.3 per cent, according to people familiar with the figures. The pound was steady at $1.35 immediately after the data.
> George Brown, senior economist at Schroders, said that “the UK economy has proven more resilient than many expected given the conflict in the Middle East”. But he added that “seasonal quirks” were probably “flattering” the quarterly figures and growth was likely to lose steam this year. The UK has tended to show a pattern of strong quarterly growth readings early in the year, with weaker outcomes as the year progresses. Quarterly growth was driven by an increase of 0.5 per cent in the country’s dominant services sector. The biggest contribution to that sector’s expansion came from information and communications, as well as professional and scientific output. The UK’s construction sector expanded by 0.3 per cent, while production was flat. Real GDP per head was up by 1 per cent compared with the same quarter a year ago.
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Relevance: New UK GDP data shows less-than-expected shock from Iran and energy price hikes. Combined with UK bond yields increasing in relative attractiveness due to volatility in the US and Japan, this provides additional fiscal headroom before the Autumn Statement and its budgetary consequences. Note that the ONS reports figures for the quarter itself; this would be 1.6% SAAR if it were like the BEA in the US. Year-over-year growth is 1.2% and 1.0% on a per capita basis.
> The UK economy grew by 0.4 per cent in the second quarter, a relatively robust performance that suggests businesses are weathering threats including the Gulf-related surge in energy prices. Thursday’s figure from the Office for National Statistics was in line with analysts’ forecasts and compared with a growth rate of 0.6 per cent in the previous three-month period. In the month of June alone, GDP grew 0.3 per cent, following zero growth in May 2026 — a downward revision from the previous increase of 0.1 per cent for that month.
> The figures will come as a relief to Andy Burnham, the new prime minister, as he pledges to broaden growth across more of the country and tackle the cost of living crisis. The UK economy is expected to expand by 1.1 per cent this year, according to the Bank of England’s latest forecasts, marginally below the 1.3 per cent pace recorded for 2025. Nevertheless, rising inflation is set to take a toll on households’ real incomes this year, with the BoE predicting inflation will rise from 2.6 per cent to 3.2 per cent towards the end of the year. Meanwhile, the Iran war continues to threaten the economy. Internal UK Treasury scenarios suggest that if the Strait of Hormuz remains badly disrupted until the end of the year, growth in 2027 could be dragged down to just 0.3 per cent, according to people familiar with the figures. The pound was steady at $1.35 immediately after the data.
> George Brown, senior economist at Schroders, said that “the UK economy has proven more resilient than many expected given the conflict in the Middle East”. But he added that “seasonal quirks” were probably “flattering” the quarterly figures and growth was likely to lose steam this year. The UK has tended to show a pattern of strong quarterly growth readings early in the year, with weaker outcomes as the year progresses. Quarterly growth was driven by an increase of 0.5 per cent in the country’s dominant services sector. The biggest contribution to that sector’s expansion came from information and communications, as well as professional and scientific output. The UK’s construction sector expanded by 0.3 per cent, while production was flat. Real GDP per head was up by 1 per cent compared with the same quarter a year ago.
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