The UK economy expanded by 0.6% in the first quarter of 2026, according to official data released before the full impact of the Iran war. The figures show a modest uptick from the previous quarter, but economists caution that the outlook remains uncertain.
GDP Growth Details
Real gross domestic product (GDP) grew by 0.6% in the three months to March 2026, compared with the previous quarter. This follows a 0.5% growth in the three months to February and a 0.4% growth in the three months to January, new figures reveal.
Services output, the largest sector of the UK economy, rose by 0.8% in the quarter, accelerating from 0.6% in the three months to February. Production output grew by 0.2%, a slowdown from 1.1% in the previous three-month period. Construction output increased by 0.4%, marking a recovery after five consecutive quarterly declines, including a 1.9% fall in the three months to February.
Expert Warnings
Crucially, these figures do not fully account for the effects of the Iran war, which has led to rising oil prices and inflation. Craig Fish, Director at London-based Lodestone Mortgages, commented: "Quarter one GDP growth of 0.6% is welcome, but one swallow doesn't make a summer. January and February did the heavy lifting, and March was already showing production falling, the first month feeling the full weight of Middle East conflict and energy price rises."
He added: "The International Monetary Fund made its sharpest downward revision for any G7 economy right here in the UK, and independent forecasters have slashed their full-year outlook to just 0.6%. At best, future quarters look flat. Construction growing after five consecutive falls is a relief, but one positive quarter doesn't make a recovery. The housing sector needs sustained growth to make any dent in supply, and we're nowhere near that. Don't be fooled by the headline number."
What This Means
While the GDP data shows short-term improvement, the underlying risks from geopolitical tensions and energy costs suggest that the UK economy faces headwinds in the coming months. Policymakers and businesses will be watching closely for signs of a sustained recovery.
