The last month of Sir Keir Starmer’s premiership ended with stronger than forecast growth. New ONS data shows the UK economy expanded by 0.4% in July alone, smashing forecasts. That follows growth of 0.3% in June 2026 and no growth in May 2026.
The ONS says July’s growth was because of rises of 0.4% in services, 0.2% in production and 0.1% in construction. On an annual basis, real UK GDP is estimated to have grown by 1.3% in the quarter to July 2026 the ONS reports. That’s relatively slow by historic standards, but in line with the UK’s weak growth over the last few years.
England’s sensational run to the third-fourth playoff in the men’s football World Cup, and the heatwave, both affected the UK economy in July, the ONS says. However, computer programming was a big factor behind growth, as the AI boom pushed up activity.
Digging into today’s GDP report, we can see the UK services sector had a decent July, with growth in 11 of its 14 subsectors. According to the ONS, the fastest growth was in: professional, scientific and technical activities; IT and communication; admin and support service activities; and manufacturing, with growth of 0.9% in the month.
Economists are reacting favourably to the data. Paul Dales, chief UK economist at Capital Economics, is hopeful AI could prove to be a longer-lasting boost to real activity. Ben Jones, CBI senior lead economist, says Britain’s economy has been more resilient to the Iran war than expected.
But Richard Carter, head of fixed interest research at wealth managers Quilter Cheviot, warns that future growth will be “hard to come by”, while Andrew Hunter, senior economist at Moody’s Analytics, says downside risks to UK economy remain high.
He adds: “It is worth remembering the repeated pattern in recent years of strong growth in the first half of the year being followed by a sharp slowdown in the second.”
Today’s key events
• 1.30pm BST: US CPI inflation report
• 3pm BST: University of Michigan’s US consumer confidence report
We’ll be tracking all the main events throughout the day on our business live blog …
