UK economy records surprise 0.3% growth in first month of the Iran war
Summary
The UK economy grew by 0.3% in March 2026, despite the start of the Iran war at the end of February. This growth was stronger than expected and driven mainly by services like computer programming and advertising, along with a return to growth in construction.Key Facts
- UK GDP grew 0.3% in March 2026, exceeding forecasts of a 0.2% decline.
- Growth in the first quarter of 2026 was 0.6%, higher than 0.1% in the last quarter of 2025.
- Services sector led growth, especially computer programming and advertising industries.
- Construction sector returned to growth in March.
- Iran war started on February 28, 2026, causing oil and gas prices to rise sharply.
- Retail sales increased in March, even after removing the effect of rising fuel costs.
- Bank of England warned of likely higher interest rates due to rising inflation linked to the war.
- Inflation rose from 3.0% in February to 3.3% in March, influenced by increased fuel prices.
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