Britain’s economy grew 0.6% in first quarter, led by services

Britain’s economy expanded 0.6% in the first quarter of 2026, with the Office for National Statistics leaving the figure unchanged from its first estimate. The reading captured a strong start to the year before the full effects of higher energy prices and the Middle East conflict could feed through to households and businesses.

The growth was led by services, where strength in computer programming, wholesale trade and advertising outweighed weakness in rental companies and recruitment agencies. Production output, by contrast, contracted 0.1% in the quarter, underscoring how uneven the recovery was beneath the headline GDP figure. The latest quarterly national accounts also showed that the first quarter followed revised growth of just 0.1% in the final three months of 2025, and the ONS trimmed full-year 2025 growth slightly to 1.3%.

The first-quarter gain was the third year in a row of especially strong growth at the start of the year, a pattern that has raised questions over seasonal adjustment methods. The ONS said it had reviewed the issue and found no statistically significant seasonality, but it said it would keep monitoring the data closely. That debate matters because the underlying household picture was weaker than the GDP number suggested. Real household disposable income per head fell 0.8% in the quarter after rising at the end of 2025, and the household saving ratio dropped 0.7 percentage points to 8.9%, as families drew down less or saved less of what they brought in.

The Bank of England kept Bank Rate at 3.75% on 17 June, with the Monetary Policy Committee voting 7-2 to hold steady and two members preferring a rise to 4%. The central bank said inflation had fallen to 2.8%, but it expected price growth to rise this year. It also said global energy prices had fallen since its previous meeting in response to events in the Middle East, though they remained above pre-conflict levels and volatile.

That leaves the second half of the year exposed to weaker momentum than the first quarter suggested. Business surveys and April data already pointed to softer activity ahead, while tighter financial conditions, cautious consumers and lingering uncertainty could limit investment and spending just as the energy shock works its way through the economy.