Key events
These are the first UK GDP figures for Andy Burnham’s chancellor John Healey to respond to. Healey said:
I know people are worried about the impact of the conflict in the Middle East on their cost of living, which has been too high for too long and it has added pressure on British businesses.
This is an active, hands-on government, putting British interests first – giving breathing space to those feeling the strain, making our country more resilient and bringing hope back.
We’ve seen the fastest growth in the G7 this year, but we now need to double down and drive growth in every postcode.
The US-Israeli war on Iran has been perhaps the dominant global economic narrative of 2026, but the effects on the UK economy still appear unclear, said the ONS.
We know that higher oil prices have immediately fed through to higher inflation, but there has so far been limited evidence of what Bank of England governor Andrew Bailey has termed “second-order effects” of price pressures spreading through the UK economy.
Businesses are definitely alert to the threat from the conflict, which started at the end of February. However, the ONS put the war in the basket of “difficult to quantify their exact impact”.
The ONS said
The conflict in Iran, which started at the end of February, has been referred to by various businesses in terms of June 2026 data. These comments were cited in some manufacturing industries, wholesale, land transport services, warehousing and travel agencies. However, it should be noted that fewer comments to the survey referring to the Iran war were provided in June 2026 compared with previous months, which coincided with a period of ceasefire.
This downward trend was also cited in our Business Insights and impact of the UK economy: 2 July 2026 bulletin. In June 2026, 31% of businesses with 10 or more employees reported concern about international conflict affecting supply chains over the next year; this was a continued fall from the recent peak this April (38%).
UK GDP grows 0.4% in second quarter helped by World Cup and weather
Good morning, and welcome to our live, rolling coverage of business, economics and financial markets.
The UK economy grew by 0.4% in the second quarter of 2026, in line with economists’ expectations, but with faster growth than expected in June as the football World Cup and warmer weather helped retailers and leisure sectors.
It follows growth of 0.6% in the first quarter, representing a fairly strong start to the year – at least in the context of recent history.
The Office for National Statistics (ONS) said that growth in the latest quarter was mainly caused by an increase of 0.5% in the services sector, the construction sector increased by 0.3%, while production output showed no growth.
The football World Cup was cited anecdotally by some businesses as a contributor to growth in June. GDP grew by 0.3% during June, after showing no growth in May. The ONS said:
The FIFA Football World Cup, which started on 11 June 2026, was cited as a reason for an increase in turnover in June 2026 by businesses in industries such as the manufacture of alcohol, wholesale, food and beverage serving activities, publishing activities, television production and advertising.
And the hot weather – the start of a long, hot summer in the UK and Europe – helped some businesses, while hindering others such as builders, as well as schools.
Some positive impacts were cited by some businesses across a range of manufacturing industries, retail, accommodation, and amusement and recreation activities. On the reverse, the warm weather was also cited as having a negative impact in terms of construction activities and also in education where schools were closed because of the heatwave.
More details to follow.
The agenda
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10am BST: Eurozone industrial production (June; previous: -0.2%; consensus: -0.1%)
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1:30pm BST: US producer price index inflation (July; prev.: -0.3%; cons.: 0.2%)
