The UK economy grew by 0.6% in the first quarter of 2026, and by 0.3% in March, the first month since the Iran war, the latest ONS figures show.
GDP in the first quarter of 2026 was 1.1% greater than a year ago. However, industry experts say despite the welcome news, growth is unlikely to be sustained in the Q2 figures.
Rob Morgan, chief investment analyst at Charles Stanley, said: The UK economy started the year with strong momentum, and following a buoyant first couple of months the higher fuel costs seen in March failed to knock it off course.
"Overall, it’s encouraging that the economy grew 0.6% over the quarter with positive contributions across all three sectors, but with the UK finding itself at the mercy of global energy markets that may be as good as it gets for the rest of the year.
"The consequences of the conflict in the Middle East are still unfolding, and following a good start to the year the UK economy could be stopped in its tracks. The sudden increase in global oil and gas prices threatens to reignite inflation, drain household finances, and squeeze company profits, which is set to put the skids under a buoyant start to the year.
"If energy prices retreat, the UK economy could weather the storm reasonably well and even reaccelerate later in the year. But a higher plateau risks pushing the country towards an unwelcome cocktail of ‘stagflation’ – stubborn inflation and weaker growth – that dents both corporate performance and household budgets."
George Lagarias, chief economist at Forvis Mazars, commented: "Upward surprises are always welcome, even if the data is historic and subject to revision. The good news lies in the economy outperforming consensus estimates for lower growth, and that it did so across most sectors. At 1.1% for the year to March, economic growth outpaced forecasts by 0.3%.
"The bad news is that this measurement is mostly behind us. We are already in the middle of the second quarter, where the impact of the closure of the Strait of Hormuz and higher inflation eating into growth will be more felt. Having said that, we can’t overlook either the resilience or the breadth of the British economy, especially in times of unusual global trade turbulence. We would not expect the good number to further increase the probabilities for rate hikes this year, as the Bank of England will likely be focusing on more current data."
Aaron Bright, assistant portfolio manager at investing and trading platform IG, said: "Today's GDP figures show the UK economy growing 0.3% in March and 0.6% in the three months to March, whilst they are above expectations, nobody should be popping champagne any time soon.
"The Strait of Hormuz disruption is feeding directly into rising energy and input costs, squeezing business margins and household budgets alike. As a country heavily reliant on imported energy, the UK is acutely exposed to every twist and turn of this conflict.
"With UK inflation set to climb and over a quarter of businesses already reporting falling turnover in April, the growth momentum seen in these GDP figures looks rather challenging to sustain.”
Richard Pike, sales and marketing director at Phoebus Software, added: “However you view the latest figures, the UK economy is near stagnant with only modest growth since the start of the year, and uncertainty around interest rates and inflation levels confidence is in short supply. That said, most mortgage businesses I speak to are still doing great volumes.
"This uncertainty, including political instability in Westminster, has sent bond yields surging to near 20-year highs this week and sent the pound and equity markets falling. This will put pressure on the cost of capital across the economy, including mortgage rates. Although we have seen some product rate cuts recently, there’s a good chance that mortgage borrowing will become more expensive in the short term and put continued pressure on household finances.
"The country and the markets need the Government and the Bank of England to do all it can to steady the ship, but how achievable that is with the current incumbent in No 10 remains to be seen.”
