UK Growth Slows to 0.4 Percent in the Second Quarter as Production Stalls
The United Kingdom economy grew 0.4 percent in the second quarter of 2026, slowing from 0.6 percent in the first, according to the first quarterly estimate published by the Office for National Statistics on 13 August 2026. Output was 1.2 percent higher than the same quarter a year earlier.
Growth came almost entirely from services, which expanded 0.5 percent. Construction added 0.3 percent and production recorded no growth at all. Real GDP per head rose 0.4 percent on the quarter and 1.0 percent on the year.
Where the growth was, and was not
Within services, information and communication rose 2.7 percent and professional, scientific and technical activities 1.7 percent, while administrative and support services fell 0.9 percent. Within production, manufacturing rose 1.0 percent and mining and quarrying 0.2 percent, but electricity and gas fell 2.3 percent and water supply and waste management 3.7 percent, enough to hold the sector flat overall.
| UK, second quarter 2026 | Change on the quarter |
|---|---|
| GDP | +0.4 percent |
| Services | +0.5 percent |
| Construction | +0.3 percent |
| Production | 0.0 percent |
| Business investment | +1.7 percent |
Office for National Statistics, 13 August 2026. Annual GDP growth was 1.2 percent; nominal GDP rose 0.8 percent and the GDP implied deflator 2.9 percent year on year.
The two sides of the account describe the quarter differently, and both descriptions matter. Measured by output, the quarter was service-led: services grew 0.5 percent while production did not grow at all. Measured by expenditure, the support came from capital rather than from the consumer. Gross fixed capital formation rose 1.2 percent on the quarter and is 2.7 percent higher on the year, with business investment up 1.7 percent on the quarter though only 0.8 percent on the year. Household consumption rose 0.3 percent and is 1.0 percent above the same quarter a year earlier. Government consumption fell 0.3 percent while standing 1.4 percent higher on the year. Exports and imports each rose 0.5 percent, and chained volume inventories fell by 1,382 million pounds.
The Office for National Statistics does not publish percentage-point contributions to growth for these expenditure components in this release, so none is computed here. What can be said without them is that the strongest quarterly expenditure figure was business investment, at more than four times the pace of household consumption, and that the weakest was government consumption, which fell.
The trade picture
The total goods and services trade deficit widened by 0.3 billion pounds to 8.0 billion pounds in the second quarter. Beneath that, the goods deficit widened by 1.2 billion pounds to 60.7 billion pounds while the services surplus widened by about 0.9 billion to 52.7 billion pounds, the familiar British shape of a large goods deficit substantially offset by services.
June itself was weak on the export side. Goods exports fell 2.2 billion pounds, or 6.3 percent, with declines to both EU and non-EU countries; goods imports fell 0.4 billion pounds, or 0.7 percent. Exports to the EU fell 7.4 percent and to non-EU countries 5.4 percent.
The Office for National Statistics states the UK trade deficit for goods and services was 2.1 percent of nominal GDP in the second quarter, or 1.0 percent excluding precious metals.
The monthly picture, and a caveat worth carrying
Monthly GDP grew 0.3 percent in June and 0.4 percent in the three months to June. Production fell 0.2 percent on the month, with manufacturing down 0.5 percent, while services rose 0.4 percent and construction fell 0.1 percent, the last driven by an 11.0 percent fall in public housing new work.
The Office for National Statistics is explicit about reliability. It states that early estimates of GDP are subject to revision in either direction, cites a mean revision of positive 0.08 percentage points and a mean absolute revision of 0.27 percentage points between first and final estimates, and warns in its own words that “expectations of accuracy and reliability in early estimates are often too high.” There are no revisions to previously published quarterly GDP data in this release, though the monthly path was revised: growth in the three months to May was cut to 0.6 percent from 0.7 percent. Revisions covering 1997 to 2024 are due in the Blue Book article on 20 August 2026.
Why it matters
These figures are the evidentiary base under Fitch’s affirmation of the United Kingdom the following day. Fitch forecasts growth of 0.9 percent for 2026 against an AA median of 2.9 percent, and it cut that forecast by a quarter of a point since February citing high energy prices, tighter funding conditions and labour market weakness. The official data show why: a quarter carried by one sector on the output side, with production flat and the goods deficit widening.
For Gulf investors the relevant channel is gilts. Fitch expects Bank Rate held at 3.75 percent through 2026, and the debt interest bill it flags as around double the peer median is a function of gilt yields that a 0.4 percent growth quarter does nothing to relieve.
Outlook
Three UK releases land within a week: the labour market on 18 August, July inflation on 19 August, and public sector finances on 21 August. The last of those matters most for the rating: borrowing was 16.0 billion pounds in June, and public sector net debt excluding public sector banks stood provisionally at 2,989.9 billion pounds, or 94.9 percent of GDP, at the end of June. The Monetary Policy Committee does not meet in August; its next decision is 17 September.
Sources: Office for National Statistics, GDP first quarterly estimate April to June 2026; GDP monthly estimate June 2026; Index of Production June 2026; UK Trade June 2026; Business investment April to June 2026 provisional results, all published 13 August 2026. Office for National Statistics, Public sector finances June 2026, published 21 July 2026. Bank of England Bank Rate as at the decision of 30 July 2026. Fitch Ratings, Rating Action Commentary on the United Kingdom, 14 August 2026.
