Britain’s economy is expected to show signs of a significant slowdown when official figures for April are released on Friday, following a surprisingly strong start to the year. Forecasts anticipate a sharp pullback, largely attributed to geopolitical tensions in the Middle East impacting fuel prices.
The Office for National Statistics (ONS) data is set to reveal the initial squeeze on household finances as the conflict drove up petrol and diesel costs. Retail figures for April have already indicated a stark downturn, with sales falling at their fastest rate in almost a year, down 1.3 per cent.
This decline was exacerbated by a substantial 10.2 per cent plunge in motor fuel sales – the largest fall since November 2020. This reversal is thought to be partly due to households stocking up on fuel in March as prices began to rise.
The anticipated poor performance in April’s dominant service sector is expected to pull overall gross domestic product (GDP) significantly below the 0.3 per cent growth recorded in March.
March’s out-turn helped drive growth of 0.6% overall in the first quarter of 2026, which was far better than expected.
But the strong growth is likely to start fading throughout the second quarter, according to experts.
Deutsche Bank chief UK economist Sanjay Raja said: “After a super strong start to the year, we expect the UK to see some course correction in the second quarter.
“Indeed, with the energy shock from the Iran conflict in full swing, household incomes will likely be squeezed.
“The cost of living and the cost of doing business will have likely increased, weighing on activity and investment.”
He said he is not expecting a “big drop-off in momentum just yet”, but is expecting GDP to edge down by around 0.1% month-on-month in April as the effects take hold.
Mr Raja added: “We continue to think activity will remain subdued as the energy shock catches up with households and businesses, while domestic political uncertainty likely ramps up over the summer.”
Pantheon Macroeconomics experts are more pessimistic, forecasting a 0.2% monthly decline in GDP in April, while Investec Economics is expecting the economy to remain flat.
Investec economist Ellie Henderson said: “Despite challenging global economic conditions, the UK economy managed to expand by 0.3% on the month in March, surpassing expectations.
“Although the growth in output was fairly broad-based, some of the strength could be attributed to consumers and firms bringing forward certain purchases in anticipation of subsequent price rises as the shock of higher energy prices filter through.
“This frontloading might have also lifted output in some areas in April, but ultimately its effect will be temporary and will lead to weaker numbers thereafter as inventories are then run down.”
She added: “We anticipate some weakness in broader discretionary spend in April, which is likely to have impacted spending on food services, accommodation and arts.”
