16 April 2026
If you are covering the latest UK GDP figures from the Office for National Statistics, please find below a comment from Lindsay James, investment strategist at Quilter:
“The UK economy has bounced back somewhat as it continues its fragile start to 2026, with growth coming in at 0.5% for February, a recent high amidst stalling figures. Given this will only have taken into account the first days of the US-Iran conflict, the true fallout, however, is yet to be felt, but nevertheless this will be a welcome relief to the Labour government. Growth has also been revised up to 0.3% in January too, suggesting that a recovery in the UK economy was underway prior to events in Iran kicking off at the end of February. 2026 was the year the government was hoping to build on following a challenging first 18 months in power, but all that work may have just been undone by events out of Labour’s control.
“Unfortunately for the government, the worst is yet to come. Just this week, the IMF slashed its growth forecasts for the UK from 1.3% to 0.8% in 2026, the worst revision within the developed world. With the economy already achieving a run-rate of 0.8% growth on the same period last year, the implication is that headwinds will build from here on. Although the UK is expected to bounce back somewhat in 2027, the fact remains that the UK economy remains particularly at risk from global shocks.
“This surprising growth, however, will have implications for the Bank of England and whether it can get back to cutting rates this year. The market still expects it to cut at least once this year and with a fairly strong start to 2026, that may give it enough cover to do so. However, with growth now forecast by some to stall completely, the BoE is going to have to make a call on how much to look through any inflation spike and focus on the potential growth implications that are to follow. The UK economy has started 2026 well, but finds itself in a weakened position now, and any hikes could just cut off any green shoots that do survive this period.”
