UK economy shows surprising resilience – but that might not last | Richard Partington
Summary
The UK economy showed stronger growth than expected in the first half of 2026, remaining the fastest growing in the G7 group despite challenges like the Iran war and higher energy prices. However, experts warn this resilience might not last due to rising energy costs and ongoing global uncertainties.Key Facts
- The UK economy grew 0.4% in the three months to June 2026, after a 0.6% growth in the first quarter.
- Consumer spending rose by 0.3%, helped by warm weather and England’s success in the World Cup.
- Business investment increased by 1.7%, with a notable boost from the IT sector, partly due to artificial intelligence development.
- Deutsche Bank predicts the UK economy could grow 1.1% this year, better than the IMF’s earlier forecast of 0.8%.
- Energy price protections helped households during the first half, but a 13% rise in the energy price cap since July may increase financial struggles.
- Inflation remains high, and many households have little cushion after years of rising prices.
- Ongoing Middle East conflicts could keep oil prices high, adding more pressure on the economy.
- The UK government faces challenges balancing support for households and businesses with increased spending on defense and infrastructure.
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