The United Kingdom economy is forecast to record 0.4 percent growth in gross domestic product for the second quarter, spanning April to June — a second consecutive quarter of expansion following a 0.6 percent rise in the first three months of 2026. The Office for National Statistics releases official figures Thursday.
The expansion reflects resilience despite supply chain disruptions and persistent price pressures tied to the Iran war. Rob Wood, chief UK economist at Pantheon Macroeconomics, said the data show "the big picture is that the economy has remained resilient to the hit from the war in Iran."
Services, the largest component of UK output, drove strength in May, led by professional services and scientific research and development. Manufacturers also contributed, stockpiling goods in anticipation of supply shortages and price increases.
June presents a softer picture. Wood expects monthly GDP to dip 0.1 percent, reversing the 0.1 percent gain recorded in May, with a sharp fall in construction activity and stagnation in services and industrial production the primary drags.
Thomas Pugh, chief economist at RSM UK, is marginally more optimistic, forecasting a 0.1 percent rise in June monthly GDP. Pugh said a fall in hospitality activity will weigh on services despite the FIFA World Cup beginning in June. Business surveys indicate consumers shifted spending from restaurants to pubs to watch matches rather than increasing total expenditure, he said. Pugh added that a boost to activity could still materialize in July, given the "scorching weather and England reaching the semi-finals."
New Prime Minister Andy Burnham, who took office July 20, inherits the data. The Q2 figures pre-date his administration but offer a constructive starting point. Burnham has set a goal to achieve "growth in every postcode" and has opened a second government hub in Manchester, dubbed No. 10 North, where he plans to work weekly. He has also announced a national tour focused on cost-of-living concerns and plans to expand technical education and the apprenticeship system.
For gilt investors, sustained growth reduces immediate pressure on the Bank of England to cut rates, keeping duration risk anchored at current levels. Whether services and manufacturing can continue to offset sectoral weakness will determine the next move on the yield curve.
