UK Economy Grows 0.6% in Q1 2026

The UK economy expanded by 0.6% in Q1 2026, matching market expectations and marking the strongest growth since Q1 2025. This follows an upwardly revised 0.2% increase in the previous quarter. Services output, the main growth driver, rose by 0.8%, up from 0.2% in the prior period. The wholesale and retail trade sector led the gains, growing by 2.0%, with wholesale trade up 3.1% and retail trade up 1.6%. Production output increased by 0.2%, supported by a 0.8% rise in manufacturing and a 0.6% increase in electricity, gas, steam, and air conditioning supply, offsetting declines in mining, quarrying, and water supply sectors. Construction grew by 0.4%, as repair and maintenance surged by 3.4%, while new work fell by 1.9%. On the expenditure side, growth was driven by higher gross capital formation, household consumption, and government spending. Annually, the economy expanded by 1.1% in Q1 2026, exceeding the 0.8% forecast.

The British economy expanded 0.1% on quarter in the last three months of 2025, the same as in the previous quarter and in line with the preliminary estimate. The production sector led the growth, rising 1.2%, led by a 4% surge in manufacturing and repair and a 3.6% rise in machinery and equipment. On the other hand, the construction sector decreased by 2% and the services sector showed no growth, weighed down by a 1.4% drop in professional, scientific, and technical activities. On the expenditure side, increases were seen for household consumption (0.1%), led by transport, miscellaneous, housing, and clothing and footwear while net tourism made little contribution to growth; government spending (0.1%); gross fixed capital formation (0.2%) while business investment tumbles 2.5%. Exports were down 0.7% led by decreases in machinery and transport equipment, chemicals, material manufactures and fuels while imports went up 0.7%. Year-on-year, the GDP increased 1%.

The UK economy grew by 0.1% in the fourth quarter of 2025, matching the pace recorded in the previous three-month period and coming in slightly below market expectations of 0.2%, according to preliminary estimates. Production output rose 1.2%, reversing a 0.7% decline in Q3. Manufacturing increased by 0.9%, largely supported by gains in other manufacturing and machinery and equipment, as car production normalized following August’s cyber incident. In contrast, the dominant services sector showed no growth, after expanding by 0.2% in the third quarter. Business-facing services stagnated, while consumer-facing services posted modest growth of 0.2%. Construction weighed on overall performance, with output contracting 2.1% after a 0.4% rise in Q3. On an annual basis, GDP increased by 1.0% in Q4, falling short of expectations for 1.2% growth. For 2025 as a whole, the UK economy expanded by 1.3%, slightly above the 1.1% growth recorded in 2024.