Resilient economy set for another quarter of growth
The UK economy is expected to have recorded another quarter of growth as businesses find ways to cope with the fallout of the Iran war, but some industries are coming under increasing pressure, economists think.
Figures from the Office for National Statistics published on Thursday are set to show a degree of resilience in the economy in the face of supply chain issues and price pressures linked to the conflict, as well as a period of political uncertainty.
Some economists think gross domestic product (GDP) will have increased 0.4 per cent for the second quarter, between April and June.
This would mean the economy has continued growing after a 0.6 per cent rise in GDP for the first three months of 2026.
Rob Wood, chief UK economist for Pantheon Macroeconomics, said this would show “the big picture is that the economy has remained resilient to the hit from the war in Iran”.
It comes as the services sector – the most dominant in the UK economy – strengthened in May, largely coming from professional services and scientific research and development.
Furthermore, recent data has pointed to factories and manufacturing firms stockpiling in anticipation of supply shortages and price rises.
But a weaker picture may be emerging from June as the heatwaves bring mixed results for businesses and some industries come under increasing pressure, economists said.
Mr Wood is expecting monthly GDP to dip by 0.1 per cent in June, “reversing the 0.1 per cent gain in May, as a sharp fall in construction activity drags on growth, while services and industrial production stagnate”.
Thomas Pugh, chief economist for RSM UK, said he was expecting the services industry to have been dragged down by a fall in hospitality activity, despite the World Cup.
Mr Pugh said its own business surveys suggest “consumers were likely switching away from restaurants towards pubs to watch the World Cup, rather than increasing the total amount of spending”.