The UK economy grew 0.5% in the second quarter of 2026, exceeding expectations as services activity and exports increased, according to figures from the Office for National Statistics.
Gross domestic product expanded 0.5% between April and June compared with the previous quarter, above expectations for growth of 0.4%. This followed growth of 0.6% in the first quarter.
The level of UK GDP in the second quarter was 2.0% above its level in the fourth quarter of 2024.
Services Output Rises 0.6%
Services output increased 0.6% during the quarter, led by professional, scientific and technical activities, where output rose 2.3%.
Scientific research and development increased 6.7%, advertising and market research rose 5.4%, and legal activities advanced 3.3%.
Information and communication output grew 2.5%, supported by a 3.6% increase in computer programming and consultancy. Overall services output was 1.7% higher than a year earlier.
Construction output increased 0.8% quarter on quarter but remained 1.0% below its level a year earlier.
Production declined 0.1%, with lower output from electricity, gas, steam and air conditioning supply and from water, sewerage and waste management offsetting increases in manufacturing and mining.
Exports Increase 2.8%
Net trade provided the largest contribution to expenditure growth during the quarter.
Export volumes increased 2.8%, including a 3.7% rise in goods exports, primarily reflecting fuels. Services exports increased 2.0%.
Import volumes were unchanged overall. Goods imports declined 0.5%, led by machinery and transport equipment, while services imports increased 1.0%.
Household spending rose 0.3%, while business investment increased 1.8% during the quarter and was 5.2% higher than a year earlier.
Government consumption declined 0.5%, largely reflecting lower education activity following some school closures during June’s heatwave.
Inventories decreased by £3.40 billion, primarily due to lower manufacturing inventories.
Household Disposable Income Recovers
Nominal GDP increased 0.8% during the second quarter and was 3.8% higher than a year earlier.
Compensation of employees was unchanged overall. Wages and salaries increased 0.9%, while employers’ social contributions declined 3.4%.
Real household disposable income per head increased 1.0% to £6,577, reversing a 0.8% decline during the first quarter.
The household saving ratio increased to 8.8% from 8.6%.
Government Borrowing Rises
Government borrowing increased to 5.2% of GDP from 4.2% in the previous quarter.
Central government borrowing rose to £38.50 billion from £28.30 billion.
The ONS also revised its estimate of UK economic growth for the whole of 2025 down by 0.1 percentage points to 1.2%.
Among other G7 economies, second-quarter GDP increased 0.8% in Canada, 0.4% in the United States and Japan, 0.3% in Germany and 0.2% in Italy, while France recorded no growth.
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