The UK economy grew by 0.4% in the first quarter of 2026 — its strongest quarterly performance since Q1 2025 and above the Office for Budget Responsibility's central forecast of 0.3% — according to preliminary estimates published by the ONS on Friday.
The annual growth rate now stands at 1.4%, a modest but meaningful improvement from the 0.9% recorded in 2025.
What Grew and What Did Not
Services — which account for approximately 80% of the UK economy — led the expansion, growing 0.5% in the quarter. Professional services, financial services, and the information technology sector all recorded strong growth.
Manufacturing contracted for the fourth consecutive quarter, falling 0.3%. The sector continues to face headwinds from elevated energy costs relative to European competitors, the impact of US tariffs on UK exports, and subdued global industrial demand.
Construction grew 0.2%, partially recovering from a weather-affected fourth quarter of 2025.
The Productivity Question
While the headline growth figure is encouraging, economists point out that the UK's productivity performance — output per hour worked — remains poor by historical and international standards. GDP growth of 1.4% accompanied by employment growth of 1.0% implies productivity growth of only 0.4% — far below the 2%+ needed to support sustained real wage growth.
Chancellor's Statement
The Chancellor welcomed the figures as evidence that the government's economic plan was working, but acknowledged that "there is much more to do" to raise the economy's underlying growth rate. The government's industrial strategy, due to be published in full next month, is expected to focus on increasing business investment and closing the UK's productivity gap with France and Germany.
