UK GDP grows 0.4 percent in July
UK GDP grew 0.4% in July, marking the third consecutive month of beating forecasts and challenging earlier predictions of a sharp slowdown. While the Burnham government views the result as a positive for its spending plans, rising oil prices and bond yields are driving market expectations toward multiple Bank of England rate hikes, raising concerns about inflation and fiscal headroom.
GN markets/growth (en-US) highlights that the UK has now posted three consecutive months of better-than-expected GDP growth, a trend Bank of England Governor Andrew Bailey acknowledged as slightly stronger than anticipated. The report also notes that while the services sector led the expansion, surging oil prices are prompting markets to price in four potential rate hikes over the next year, complicating the fiscal outlook for the Burnham government ahead of Chancellor Healey’s October budget.
Source: GN markets/growth (en-US)GN markets/growth (en-US) attributes the July expansion largely to a surge in hospitality activity driven by the World Cup and record-breaking summer heat, noting that services output rose by 0.4%. The report highlights that the UK remains the fastest-growing economy in the G7 for the first half of the year, despite warnings from the Resolution Foundation that geopolitical conflicts could erode these gains.
Source: GN markets/growth (en-US)Deutsche Bank argues the UK's growth momentum is becoming "harder to ignore," noting that strong performance in tech-driven services sectors suggests AI investment is starting to filter into broader economic output. Following this data, the bank has significantly raised its third-quarter GDP forecast to 0.4% from a previous estimate of 0.1%, per GN markets/growth (en-US).
Source: GN markets/growth (en-US)According to GN markets/growth (en-US), the July expansion beat market expectations of zero growth, following a flat May and a 0.3% rise in June, which suggests the UK economy is entering the third quarter with upward momentum despite ongoing softness in production and construction.
Source: GN markets/growth (en-US)UK real GDP increased by 0.4 percent in July 2026. Services drove the monthly gain, while production and construction also expanded.
Source: GN markets/growth (en-US)
