14 May 2026
If you are covering the latest UK GDP figures, please see the following comment from Lindsay James, investment strategist at Quilter:
“March’s GDP figures suggest the UK economy entered the spring broadly in line with expectations at the quarterly level, but with the latest monthly data proving more resilient than many had feared. GDP grew by 0.3% over the month, holding up better than expected after February’s stronger reading, even as the economy expanded by 0.6% across the first quarter as a whole, driven by firmer performance in the services sector across the board.”
“However, expectations have shifted significantly since the outbreak of war and this resilience may start to be seriously tested. The IMF has cut its UK growth forecast from 1.3% to 0.8%, and the longer the Strait of Hormuz remains closed, the greater the risk that further downgrades to global growth follow. With global growth already revised down from 3.3% to 3.1%, the UK is unlikely to be sheltered from the fallout, particularly as an energy importer.
“For the government, this is a difficult backdrop. A decent first-quarter figure may provide some political breathing space, but higher energy costs and rising government bond yields all point to a more challenging few months ahead. The latest bout of speculation around Keir Starmer’s position has already caused a sharp move higher in gilt yields, underlining how little tolerance markets currently have for political uncertainty when the UK’s fiscal position is already so constrained.
“That leaves ministers with few easy options. Tax rises or spending restraint may become harder to avoid if market pressure persists, while any signs of wavering on fiscal discipline could risk further unease in the gilt market. Rachel Reeves is still viewed by many investors as an important anchor for confidence, but the rigidity of the fiscal rules means policy can too often be shaped by short-term moves in fiscal headroom rather than a long-term plan for sustainable growth.
“For investors, the concern is that a fragile domestic recovery is now meeting a much less forgiving global backdrop, at the same time as political risk is again being priced into UK assets.”
