The UK economy is expected to have recorded another quarter of growth as businesses find ways to cope with the fallout of the Iran war, but some industries are coming under increasing pressure, economists think.
Figures from the Office for National Statistics being published on Thursday are set to show a degree of resilience in the economy in the face of supply chain issues and price pressures linked to the conflict, as well as a period of political uncertainty.
Some economists think gross domestic product (GDP) will have increased 0.4% for the second quarter, between April and June.
This would mean the economy has continued growing after a 0.6% rise in GDP for the first three months of 2026.
Rob Wood, chief UK economist for Pantheon Macroeconomics, said this would show “the big picture is that the economy has remained resilient to the hit from the war in Iran”.
It comes as the services sector – the most dominant in the UK economy – strengthened in May, largely coming from professional services and scientific research and development.
Furthermore, recent data has pointed to factories and manufacturing firms stockpiling in anticipation of supply shortages and price rises, which has helped keep growth elevated.
But a weaker picture may be emerging from June as the heatwaves bring mixed results for businesses and some industries come under increasing pressure, economists said.
Mr Wood is expecting monthly GDP to dip by 0.1% in June, “reversing the 0.1% gain in May, as a sharp fall in construction activity drags on growth, while services and industrial production stagnate”.
Thomas Pugh, chief economist for RSM UK, said he was expecting the services industry to have been dragged down by a fall in hospitality activity, despite the Fifa World Cup kicking off in June.
Mr Pugh said its own business surveys suggest “consumers were likely switching away from restaurants towards pubs to watch the World Cup, rather than increasing the total amount of spending”.
But he added: “There could still be a boost to activity in July, given the scorching weather and England reaching the semi-finals.”
Mr Pugh has a slightly more positive outlook for June, forecasting monthly GDP to have risen by 0.1%.
“All told, we expect GDP to nudge up in June, helped by a big jump in erratic mining activity,” he said.
“That will be enough to deliver 0.4% growth for Q2 (the second quarter), as strong momentum from Q1 (the first quarter) and consumers smoothing through higher inflation helped to support solid growth.”
A quarterly increase in GDP will likely be good news for new Prime Minister Andy Burnham, who has said he wants to achieve “growth in every postcode” of the UK.
He opened a new headquarters for the centre of Government in Manchester in late July, named No 10 North, where he is expected to work once each week as part of his move to push power out of Westminster.
