UK GDP grows 0.6% in first quarter as war, political risks threaten outlook

The U.K. economy expanded 0.6% in the first quarter of 2026, its fastest growth in a year, the Office for National Statistics said May 14, 2026. The reading matched economists’ median forecast and exceeded the Bank of England’s 0.5% estimate, but economists warned the pace is unlikely to persist as the Iran war lifts energy costs and weakens demand. GDP rose 0.3% in March after a 0.4% gain in February, helped by services. Consumer spending increased 0.6%, business investment rose 0.7% and government spending climbed 0.4%. Services output advanced 0.8%, while real GDP per head grew 0.6%, the fastest improvement in living standards since 2022. Capital Economics said first-quarter growth may mark the year’s peak, forecasting stagnation in the second and third quarters and a possible mild recession in a downside case. Political pressure on Prime Minister Keir Starmer after Labour’s May 2026 local election losses has also pushed longer-dated borrowing costs to multidecade highs.