The UK economy Q2 growth figure came in at 0.4% between April and June 2026, lifted in part by warm weather and football crowds, though the pace has eased from the start of the year and economists expect a harder stretch ahead.
The result, in line with what economists had pencilled in, falls short of the 0.6% expansion recorded in the first three months of 2026. The Office for National Statistics (Office for National Statistics) said growth had ‘remained relatively robust’, with the services sector driving the quarter’s performance while manufacturing also contributed positively. Overall, the economy is now 1.2% bigger than a year ago.
What drove UK economy Q2 growth sector by sector
The ONS breakdown shows the services sector increased by 0.5% over the quarter, the construction sector grew by 0.3%, and the production sector recorded no growth at all. Services output is estimated to be 1.5% higher than it was in the same quarter a year ago, the ONS said.
Within those broad figures, some sectors stood out sharply. Computer programming, consultancy and related activities were up 3.7%; advertising and market research grew 4.3%; and scientific research and development rose 3.9%. The ONS identified the manufacture of basic pharmaceutical products and pharmaceutical preparations as the largest single positive contributor to growth in the quarter, up 4.2%. On the other side of the ledger, falls in power generation and sewerage weighed on the overall picture.
Month by month, June was the strongest performer, with output up 0.3% compared with May. The ONS noted that some businesses reported ‘good weather and sporting events may have had a positive effect’ during the month. The men’s football World Cup, which kicked off mid-June, boosted customers at hospitality venues showing the matches, and several summer heatwaves also played a role. May’s growth, however, was revised down from an earlier estimate of 0.1% to zero.
Political uncertainty and the Iran war added headwinds
The slower pace of UK economy Q2 growth compared with the opening quarter reflects two overlapping pressures. The ongoing impact of the war in Iran weighed on business confidence and energy costs, while political uncertainty in the run-up to Sir Keir Starmer’s resignation as prime minister at the end of June added to the unsettled backdrop.
Chancellor of the Exchequer John Healey MP acknowledged the strain on households and firms. ‘I know people are worried about the impact of the conflict in the Middle East on their cost of living, which has been too high for too long and it has added pressure on British businesses,’ he said. His stated aim is to make the country ‘more resilient’ and to ‘drive growth in every postcode’.
Shadow chancellor Sir Mel Stride took a sharper tone, arguing that Labour had ‘mismanaged the economy with their tax and borrowing spree, leaving it weak and vulnerable to the effects of shocks like the Iran War’. He added: ‘Labour need to realise that it’s their poor decisions which have stifled growth and made the cost of living worse.’
Economists flag rising inflation and unemployment ahead
For all the resilience shown so far, forecasters are cautious about what follows. Fergus Jimenez-England, Associate Economist at the National Institute of Economic and Social Research, said the UK economy had ‘weathered the recent energy shock better than many feared’ but that the recent pace of growth was unlikely to be sustained. ‘Both inflation and unemployment are set to rise in the coming months while business sentiment remains fragile and could dampen further with ongoing energy price volatility,’ he said. ‘The economy has shown welcome resilience so far, but we are not out of the woods yet.’
Suren Thiru, chief economist at the ICAEW, agreed that households and firms had ‘largely shrugged off the shockwaves from the Iran war’, but he too expects weaker growth in the second half of 2026. That, he said, would make the chancellor’s Budget in October ‘more challenging’.
It is that October Budget which now sits at the centre of the UK’s near-term economic debate: with growth slowing, inflation set to climb, and energy prices still volatile, the decisions John Healey takes in the autumn will be made under considerably more pressure than the spring figures might have implied.
