The UK economy has recorded its strongest quarterly growth in a year during the first three months of 2026, surprising economists with a spurt in activity even after the onset of the Iran war, official figures show.
Gross Domestic Product (GDP) increased by 0.6% between January and March, the Office for National Statistics (ONS) said. This exceeded the 0.5% growth that most economists had anticipated and matched the revised 0.6% growth seen in the first quarter of 2025.
Surprise March Growth
The ONS also reported that GDP rose by 0.3% in March alone, defying expectations of a slowdown following the beginning of the conflict in the Middle East.
Chancellor Rachel Reeves responded to the figures by cautioning against jeopardising the “stability” of the economy, amid political uncertainty over Sir Keir Starmer’s leadership. She stated: “The choices I have made as Chancellor mean our economy is in a stronger position as we deal with the costs of the war in Iran. Now is not the time to put our economic stability at risk. To do so would leave families and business worse off. Instead, this Government is getting on with the job of building an economy that is stronger, more resilient and prepared for the future.”
Sector Performance
The services industry provided a significant boost to the economy during the first quarter, while manufacturing and construction output also increased, according to the ONS. ONS director of economic statistics Liz McKeown said: “Growth picked up in the first quarter of the year, led by broad-based increases across the services sector. Within that wholesale, computer programming and advertising performed particularly well. Production also grew slightly, while construction returned to growth, though only partly reversing weakness at the end of last year.”
Revisions and Forward-Looking Indicators
The ONS made several revisions to previous data. February’s growth figure was revised down to 0.4% from 0.5%, and January’s was revised to show no growth from a previous 0.1% increase. GDP for the final quarter of 2025 was revised up to 0.2% from 0.1%.
Some economists noted signs of “front loading” in March, suggesting businesses and consumers brought forward activity ahead of expected shortages or price increases. The ONS indicated that a range of industries, including manufacturing, car sales, and rental firms, cited the Iran war as a reason for advancing activity, while others reported that the conflict had dampened sales in March. Retailers also noted motorists stocking up on fuel as prices rose sharply.
Suren Thiru, chief economist for the ICAEW, commented: “This strong first quarter is probably the high point for the economy this year with output likely to halve in the second quarter as surging energy costs suffocate activity, despite a short-term boost from firms stockpiling in anticipation of shortages and price rises.”
