Britain’s economic growth slowed in the second quarter of 2026 compared with the first three months of the year, official data released Thursday, August 13, showed, as domestic political turmoil and the fallout from the war on Iran weigh on the economy.
The Office for National Statistics (ONS) said in a statement that gross domestic product (GDP) grew by 0.4% between April and June 2026, down from 0.6% growth in the first quarter.
The latest GDP figures showed that services output increased by 0.5% in the second quarter. Construction activity also expanded, while industrial production remained unchanged.
Against this backdrop, newly appointed British Finance Minister John Healey said people across Britain were concerned about the impact of the war in the “Middle East” (West Asia) on their cost of living, adding that the conflict had also placed greater pressure on businesses across the country.
Liz McKeown, director of economic statistics at the ONS, said that although growth slowed in the second quarter following a strong start to 2026, the economy continued to expand at a relatively robust pace. Services, she added, remained the main driver of growth.
Britain is also grappling with persistently high inflation, a situation that has been exacerbated by the sharp rise in energy prices following the US assault on Iran.
The UK economy grew 0.4% in Q2, with June GDP unexpectedly rising 0.3%, as consumers and businesses weathered the Iran war’s energy shock. But economists warn higher prices and borrowing costs could slow growth later in 2026. #UK #Economy #GDP #Oil https://t.co/CbmbXRD50O
— OilPrice.com (@OilandEnergy) August 13, 2026
Oil Shock Adds to Economic Pressure
The slowdown comes as the war on Iran continues to reverberate through global energy markets, with disruptions to oil supplies threatening to prolong inflationary pressures.
The International Energy Agency has warned of a major disruption to global oil supplies as the conflict continues, with the resulting pressure on energy markets adding to concerns over the outlook for prices and economic activity.
The agency has also warned that the disruption to global oil supplies could accelerate the depletion of oil inventories, underscoring the growing vulnerability of energy markets to the continuing geopolitical crisis.
For Britain, higher energy prices risk feeding directly into household bills, transport costs, and business expenses, potentially further squeezing purchasing power and limiting economic momentum in the months ahead.
The latest figures therefore point to an economy that has remained relatively resilient but is facing a more difficult second half of the year. While services have continued to support growth, the combination of elevated energy costs, persistent inflation, and geopolitical uncertainty could increasingly weigh on households and businesses.
The June figures offered some relief, with monthly GDP rising by 0.3%, while services remained the main contributor to growth. But economists have cautioned that temporary factors supporting activity could fade, leaving the British economy more exposed to the effects of higher prices and borrowing costs later in 2026.
Britain’s economic outlook is thus increasingly tied not only to domestic policy decisions but also to developments beyond its borders. As the war on Iran continues to disrupt energy markets, the resulting price pressures could deepen the squeeze on living standards and make an already difficult economic environment even harder for the British government to navigate.