UK growth revised up as Britain seals fastest G7 pace in first half of 2026
The ONS now says the economy grew 0.5 per cent in the second quarter, with business investment and household incomes stronger than thought, weeks before John Healey's first Budget.
Britain's economy grew more quickly than previously thought in the second quarter, the Office for National Statistics said on Wednesday, consolidating the country's position as the fastest-growing Group of Seven economy in the first half of 2026.
Output expanded by 0.5 per cent in the three months to June, a shade stronger than the preliminary estimate of 0.4 per cent, which economists polled by Reuters had expected to be confirmed. Gross domestic product was 1.4 per cent higher than a year earlier, revised up from an initial 1.2 per cent.
The figures pointed to strength across the economy, with output rising in manufacturing, construction and the dominant services sector. Business investment was revised sharply higher, to an annual rate of 5.2 per cent, from an initial estimate of 0.8 per cent.
The clearest bright spot was household finances. Real household disposable income per head rose by 1.0 per cent in the quarter, the largest jump since the end of 2024, reversing a 0.8 per cent fall in the first three months of the year. The household savings ratio edged up to 8.8 per cent.
The numbers are a welcome boost for Andy Burnham's Government as it seeks to spur growth. The Prime Minister told Labour's conference in Liverpool on Tuesday that his plan to increase public control of key services could help bolster the economy.
But economists warned the resilience may prove short-lived. “The next six months looks tougher with potential interest rate rises, a sharp increase in inflation and another tax-raising budget all to come. That will drag heavily on growth over the winter,” said Thomas Pugh, chief economist at RSM UK.
“The upward revision to real GDP growth in Q2 … suggests that the economy has been a bit more resilient to higher energy prices in the first half of the year than previously thought,” said Ashley Webb, senior UK economist at Capital Economics. “This resilience may continue into Q3, but we still expect it to fade in Q4 as higher inflation takes a bigger bite out of households' real incomes.”
The Bank of England held interest rates at 3.75 per cent in September, and investors are pricing in a quarter-point rise in November, the first since the Iran war began, with another move expected in February.
Separate balance-of-payments data showed Britain ran a smaller current account deficit than economists expected, at 19.9 billion pounds against a consensus of 24.7 billion. Stripping out precious metals trade, the deficit narrowed to 1.4 per cent of economic output, the smallest in five years, helped by strong growth in services exports.
“The bigger picture is that the current account will remain under pressure as higher-for-longer energy prices keep imports elevated,” said Rob Wood, chief UK economist at Pantheon Macroeconomics.
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