UK Growth Revised to 0.5% in Q2 as Services Lead

Britain's economy grew by 0.5% between April and June 2026, up from an earlier estimate of 0.4%, the Office for National Statistics said. ONS

Growth from January to March stayed at 0.6%. Together, those two quarters placed the UK at the top of the G7, the group of seven large advanced economies, for growth in the first half of 2026. Reuters

The broader picture here is that the small upgrade to the headline matters less than the mix underneath it, as ministers head into budget season.

Services, such as shops, hospitality and finance, grew 0.5% in the April-to-June quarter. Production, which covers manufacturing and energy, showed no growth. Construction grew 0.3%. Total output in the second quarter was 2.0% higher than in the final quarter of 2024, revised up from 1.9%. Growth for 2025 as a whole is now put at 1.2%, after a 0.1 percentage point cut to the earlier figure.

Output per head, which divides total growth by population and adjusts for prices, rose 0.4% in the second quarter. It was 1.0% higher than the same quarter a year earlier.

Household income figures moved in both directions. Real disposable income per head, the money households have to spend or save after taxes and benefits and adjusted for prices, fell 0.8% in the first quarter and then rose 1.0% in the second. It had risen 1.2% in the final quarter of 2025. Added together, income per head rose 1.1% from January to June 2026, more than previously estimated. The Guardian

Households saved a larger share. The savings rate, the share of income that is saved rather than spent, rose from 8.6% in the first quarter to 8.8% in the second.

Business investment, spending by firms on equipment, buildings and technology, rose 1.8% in the second quarter. It was 5.2% higher than a year earlier.

In markets, the pound rose 0.4% to $1.3292 on 30 September 2026, a one-week high, and reached a six-week high against the euro, with the euro at 85.43p. Yields on two-year government bonds, the return investors demand to lend to the state, fell 0.05 percentage points to 4.86%, while ten-year yields fell four basis points to 5.356%. Inflation stood at 3.1%, above the Bank of England's 2% target.

The figures arrived as Chancellor John Healey prepared to deliver his first budget the next month. Healey gave his Growth Speech on 7 September 2026 and promised a "new age of industrialisation" for Britain. Government spending in the defence industry grew 6% in real terms, after adjusting for inflation, to £31.7 billion in 2024/25.

The broader context here is a familiar one for finance ministries: growth a little better than first thought, living standards recovering unevenly, and price pressure still elevated.

Looking to the weeks ahead, timing will shape the political debate. The higher output figure, the quarterly rebound in disposable income and stronger business investment give the Treasury short-term points to cite. Inflation above target, higher saving and flat production show the limits around them. The budget will test how Healey balances those two pictures, and whether industrial policy, including shipbuilding and defence-linked spending, is presented as the bridge between them.