Economy Slowing Even More? UK GDP Up 0.4% Apr to Jun down from 0.6% Jan to Mar

The Office for National Statistics (ONS) has today released its quarterly UK economic growth GDP figures.  We suggest this makes for painful reading given growth was only marginally saved by a temporary boost from the World Cup spending and warmer weather.

1. Summary

UK GDP grew 0.4% in the three months to June 2026, supported by strong service‑sector activity and temporary boosts from summer weather and the men’s Football World Cup. Growth slowed from earlier in the year, and underlying momentum remains fragile as production stalled and construction softened.

“Good weather and sporting events may have had a positive effect” “The men’s football World Cup… increased customers at hospitality venues showing the matches.”

The economy is now 1.2% larger than a year ago, despite geopolitical risks and domestic political uncertainty.

2. Key Drivers of Growth

Services Sector (↑ 0.5%) – Main Contributor

• Information & communication up 2.7%, led by computer programming (+3.7%).

• Professional, scientific & technical activities up 1.7%, including advertising (+4.3%) and scientific R&D (+3.9%).

• Transport & storage up 1.2%.

Consumer‑facing services rose 0.3%, with accommodation (+3.9%) and retail trade (+0.5%) performing strongly.

Production Sector (Flat)

• Manufacturing grew 1.0%, driven by:

  • Pharmaceuticals (+4.2%)

  • Electronics/optical products (+3.0%)

  • Machinery (+2.6%)

• Offsetting declines in:

  • Electricity/gas (–2.3%)

  • Sewerage/waste (–3.7%)

Construction Sector (↑ 0.3%)

• Growth driven by infrastructure new work (+1.9%) and public housing repair/maintenance (+2.5%).

• Monthly output fell 0.1% in June due to a sharp drop in public housing new work (–11%).

3. Temporary Boosts & Cross‑Industry Themes

The ONS notes several short‑term factors that lifted June activity:

Weather Effects

Heatwaves boosted:

• Retail

• Accommodation

• Leisure and recreation

But negatively affected:

• Construction

• Education (school closures)

World Cup Impact

Cited as increasing turnover in:

• Hospitality

• Alcohol manufacturing

• Publishing

• TV production

• Advertising

Geopolitical Context

Businesses continued to reference the Iran conflict, though concerns eased during a ceasefire period.

4. Monthly GDP Snapshot (June 2026)

• Monthly GDP: +0.3%

• Services: +0.4%

• Production: –0.2%

• Construction: –0.1%

Retail trade was the largest positive contributor to monthly GDP.

5. Forward Indicators (July 2026)

Early data suggest mixed but improving conditions:

Strengthening Areas

• Retail footfall rebounded after June’s heatwave.

• Redundancies continued to fall.

• UK flight volumes increased.

Softening Areas

• New property listings fell for the fourth consecutive month.

• Average time on market increased.

Business Concerns

• Energy prices: 57% of businesses concerned (70% for firms with 10+ employees).

• Fuel prices: 60% concerned (70% for larger firms).

• Economic uncertainty: remains the top challenge.

6. Client Implications

Short‑Term Outlook

• Growth is likely to moderate in late‑2026 as temporary boosts fade.

• Energy and fuel price volatility remain key risks.

• Consumer demand is stabilising but still sensitive to weather and events.

Sector‑Specific Considerations

• Tech & professional services: Momentum remains strong.

• Manufacturing: Mixed picture; pharmaceuticals and electronics outperform.

• Construction: New work remains fragile; infrastructure is the bright spot.

• Retail & hospitality: Benefited from seasonal and event‑driven demand; sustainability uncertain.

Investment & Planning Notes

• Expect revisions to GDP as more data arrive.

• Monitor energy markets closely given high business sensitivity.

• Housing market indicators suggest cooling, relevant for property‑linked planning.

7. Key Numbers