UK Economy Grows 0.4% as Services Lead Q2

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 Carry the Quarter

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.

Industry Stays Flat

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.

Investment Provides Another Lift

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.

Annual Growth Picks Up

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.