UK economy beats expectations in July with 0.4% growth

LONDON: Britain's economy grew by ​a much stronger than expected 0.4% in July, extending the ​strong performance seen in the first half of the year despite headwinds from the U.S.-Iran war, figures from the Office for National Statistics showed on Friday.

Economists polled by ‌Reuters had ⁠a ⁠median forecasts for the level gross domestic product in July to be unchanged from ​June after growth of 0.4% in June.

Compared with a year earlier, output in ​July was 1.6% higher, the fastest annual rate since February 2025 and above economists' 1.2% forecast.


Growth in the three months to July held at ​the 0.4% recorded in the three months ⁠to June, compared ‌with economists' median forecast for a slowdown to ​0.3%.

"Ongoing strength ​in the services sector was only partially offset by ⁠falls in both production and construction," ONS Director of Economic ​Statistics Liz McKeown said, adding that artificial intelligence seemed ​to be lifting software development.

In the first half of 2026, Britain's economy expanded by 1%, the fastest growth across the Group of Seven large advanced economies - although some analysts believe this may in part reflect seasonal effects that have not been fully adjusted for.

In July, ‌the Bank of England forecast the economy would expand 1.1% over 2026 as a whole, and earlier this week Governor Andrew Bailey told a parliament ⁠committee that economic data since then had come in "a bit stronger" than he had expected.

Britain, like other European economies, has taken less of ​an immediate hit to growth from the U.S.-Iran war than economists had feared at the outset.

But the conflict this week pushed oil prices above $105 a barrel with knock-on impacts on government borrowing costs, and the BoE expects inflation to rise to around 3.2% later this year.