The UK economy expanded by 0.4 per cent in the second quarter of 2026, supported by growth in services and a stronger-than-expected performance in June despite disruption from the conflict in the Middle East.

Gross domestic product increased 0.4 per cent between April and June, according to figures published by the Office for National Statistics on Thursday, following growth of 0.6 per cent in the first quarter. The economy was 1.2 per cent larger than during the same quarter last year, while GDP per head increased 0.4 per cent during the three months.

Services, which account for the majority of UK economic activity, grew 0.5 per cent during the quarter, while construction increased 0.3 per cent and production was flat.

Growth accelerated towards the end of the quarter, with monthly GDP rising 0.3 per cent in June after stagnating in May and contracting 0.1 per cent in April. Services output increased 0.4 per cent during June, offsetting declines of 0.2 per cent in production and 0.1 per cent in construction.

The figures provide an early boost for Prime Minister Andy Burnham, who took office in July promising measures to ease household financial pressures. His government has announced that VAT on household electricity bills will be removed from October 1, funded through the cancellation of the Digital ID programme. Burnham has said his government will also produce a 10-year plan for the country later this year.

Ben Jones, senior lead economist at the CBI, said the stronger June performance suggested the economy had "proved more resilient to the economic fallout from the Iran war than was widely expected a few months ago".

However, he warned that uncertainty surrounding the new government, the Autumn Budget and continued instability in the Middle East could cause businesses to delay investment.

"The challenge now is maintaining that momentum," Jones said. Tackling high industrial electricity prices, employment costs and business rates would be critical to generating sustainable growth and supporting higher real wages, he added.