UK GDP Growth Hits 1.2%, Boosting Interest Rate Hopes

New GDP figures show that the UK economy grew 1.2% year-on-year in the second quarter of 2026, accelerating from 0.9% in the first quarter.

The quarterly growth rate was 0.4%, a slight decrease from 0.6% in the previous quarter. Services led the way, with computer programming up 3.7% and information and communication up 2.7%. Manufacturing was also boosted by a 4.2% jump in pharmaceuticals output.

For beginner investors, understanding GDP figures can help explain why certain parts of their portfolio move. The data affects interest rate expectations, with a stronger economy giving the Bank of England less reason to cut rates quickly.

The next Bank of England rate decision is on September 17th, and today's data will influence that debate. A stronger pound can be good news for holidaymakers but may quietly dent returns for UK investors holding US or other overseas shares.