Britain's economy expanded 0.1% in May, rebounding from an April contraction attributed to the Iran war and matching the median forecast in a Reuters poll of economists. The Office for National Statistics reported that services output rose 0.3%, driven by a 5.1% surge in scientific research, while industrial production and construction contracted.
Over the three months to May, GDP grew 0.7%, slowing from an upwardly revised 0.8% in the preceding quarter. The International Monetary Fund upgraded its UK growth forecast for 2026 to 1%.
Geopolitical headwinds persist. Oil prices have climbed from roughly $72 to $84 a barrel since hostilities resumed between the US and Iran last week. The Resolution Foundation estimated more than half of the £23.6bn fiscal headroom will be eroded by the conflict's effects, while Deutsche Bank had predicted a 0.1% May decline and Pantheon Macroeconomics forecast flat growth for the month.