In the spring the International Monetary Fund warned Britain faced the heaviest economic blow from the Iran war among the world’s most advanced nations. Almost six months into the conflict, on the surface, the UK appears to be proving the forecasters wrong.
The latest official figures show the UK maintained its pole position as the fastest growing economy in the G7 in the first half of 2026. Despite the gloomy international backdrop and yet more domestic political uncertainty, consumers have largely continued spending and business investment has boomed.
According to the Office for National Statistics, GDP growth slowed to 0.4% in the three months to June. But that slowdown, which was predicted by City economists, followed a bumper 0.6% growth rate in the first quarter. The monthly figures for June also showed growth of 0.3%, beating expectations for zero growth.
Most City analysts say the economy is showing unexpected signs of resilience. Hotter weather and the England men’s football team reaching the semi-final of the World Cup helped to fuel an upturn in consumer spending, with growth of 0.3%. Business investment jumped by 1.7%. Analysts say a big step up in the IT sector suggests the build out of computing power needed to run artificial intelligence played a contributing role.
