The UK economy grew at a slower pace in the second quarter of 2026, with services and business investment providing much of the support.
GDP expanded 0.4% quarter-on-quarter, down from 0.6% in Q1 and in line with market expectations. The figures showed that economic activity kept growing, although the pace moderated compared with the start of the year.
Services remained the strongest part of the economy, with output rising 0.5% during Q2. Information and communication grew 2.7%, while professional, scientific and technical activities increased 1.7%, helping drive the broader expansion. Construction also contributed, growing 0.3% as both new projects and repair work increased.
Production showed little movement overall. Gains in manufacturing and mining were offset by weaker activity in electricity, gas, water and waste-related industries, leaving total production unchanged for the quarter. The contrast with services highlighted the uneven nature of the UK's Q2 growth.
Business investment was another positive part of the report. Gross fixed capital formation rose 1.2%, while household consumption increased 0.3%. Government consumption moved in the opposite direction, falling 0.3% and limiting the overall pace of expansion.
Compared with a year earlier, UK GDP grew 1.2%, improving from 0.9% in Q1 and slightly beating expectations of 1.1%. The latest figures point to an economy that is still expanding, with stronger annual growth and solid services activity, even as quarterly momentum slowed from the beginning of the year.
Renewed expectations for further Federal Reserve tightening kept the dollar supported as policymakers continued to warn about persistent inflation risks.
Fed, BOJ Hikes Lift Dollar as Oil Falls (21 – 25 September)Global markets entered the week balancing tighter monetary policy against signs of easing Middle East energy risks. The Federal Reserve remains the main macro driver after raising rates to 3.75%–4.00%, its first hike since 2023, and signaling that another increase remains possible this year. The Dollar Index advanced to 100.4, while Treasury yields remained elevated. The Bank of Japan also tightened policy, raising rates to 1.25%, although dissent within the board suggested that future increases could come at a slower pace.
Detail Falling Oil Prices Support Metals (09.21.2026)Easing oil prices offered some relief to financial markets as renewed diplomatic efforts in the Middle East reduced immediate inflation concerns.
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