UK Economy Shows Resilience Amid Iran War Headwinds

The UK economy is expected to show resilience in the face of supply chain issues and price pressures linked to the Iran war, according to recent figures from the Office for National Statistics.

Economists think gross domestic product (GDP) will have increased by 0.4% for the second quarter, between April and June, following a 0.6% rise in GDP for the first three months of 2026.

This growth is largely attributed to the services sector, which strengthened in May due to professional services and scientific research and development. Additionally, factories and manufacturing firms stockpiled in anticipation of supply shortages and price rises, helping keep growth elevated.

However, a weaker picture may emerge from June as heatwaves bring mixed results for businesses, with some industries coming under increasing pressure. Rob Wood, chief UK economist for Pantheon Macroeconomics, expects monthly GDP to dip by 0.1% in June, reversing the 0.1% gain in May.

Thomas Pugh, chief economist for RSM UK, has a slightly more positive outlook for June, forecasting monthly GDP to have risen by 0.1%. He attributes this growth to a big jump in erratic mining activity and strong momentum from Q1 and consumers smoothing through higher inflation.