The latest UK GDP figures from the Office for National Statistics have been released, which showed that monthly GDP contracted by 0.1% in April 2026, after growing by 0.3% in March and 0.4% in February.
The decline was driven in part by a 0.2% fall in services, which was partially offset by a 0.1% rise in construction.
Industry experts have shared their insights on the recent figures.
Stuart Clark, portfolio manager at Quilter, said:
“The effects of the conflict in the Middle East are now well and truly showing up in the economic data, and it isn’t pretty reading for the UK. After a surprisingly robust first quarter, April has seen GDP shrink by 0.1% as households and businesses alike have tightened their belts in the face of increasing costs and postponements of sporting events in the Middle East saw the services sector contract consequently.
“While the three-month growth has held up, the first quarter of the year is looking very much like a false dawn, and with repeated resolutions between the US and Iran failing to pass, conditions are going to remain tough for longer still.
“We expect the economy to continue to fade as the year goes on, and particularly for as long as there is no lasting peace deal in the Middle East. Even if a deal is to materialise, costs have increased and are unlikely to come back down to levels seen prior to the conflict, and as such growth will be constrained regardless. With higher energy costs hitting businesses, and a rise in the energy price cap looming for households, growth is likely to grind to a halt once again.
“This is making the job of the Bank of England incredibly difficult. With a stagflationary feel to the economy, the last thing it wants to be doing is to raise interest rates, but that is what is being priced in as inflation remains the bigger concern for now. As seen by the move by the ECB yesterday to raise rates and increaser their inflation projection for the rest of the year on the same day US producer inflation came in slightly hotter than expected.
“Furthermore, the UK increasingly looks like it will be plunged into further political crisis given events yesterday with the resignation of John Healey as Defence Secretary. With the crunch by-election in Makerfield on Thursday, coming the same day as the BoE interest rate decision and Andy Burnham appearing to be favourite to win, it appears to be a matter of when the leadership changes rather than if, with the bigger question being how long it takes.
“The longer this political limbo drags on, the more negative the impact for the UK, and in the event that Burnham succeeds Starmer, markets will be watching his government like a hawk for any indication that spending, taxation and borrowing continue to increase. The UK’s growth challenge seems to be perpetual.”
Luke Bartholomew, Deputy Chief Economist, at Aberdeen said;
“After March’s surprisingly strong GDP data, some pullback in April was always likely. And the series is very volatile month to month. But the 0.1% contraction in April is consistent with other data which suggest the economy slowing sharply going into Q2 and that recession risks are elevated.
“That economic weakness helps explain why the Bank of England is very unlikely to follow the ECB’s decision to hike at its meeting next week, and we expect rates to remain on hold for the rest of the year. But it may be that UK economic data has more of a backseat role for the time being, with investors probably more focussed on both geopolitics around the potential for an Iran deal, and domestic politics around the fate of the prime minister.”
Danni Hewson, Head of Financial Analysis at AJ Bell, said:
“One month’s data would usually be treated with an abundance of caution, but rising prices associated with the conflict in the Middle East are expected to continue putting pressure on a fragile UK economy in the months ahead.
“There had been verdant green shoots at the start of the year, but they came after months of pre-Budget nervousness and increased employment costs which have had a big impact on the labour market. March’s stronger than expected growth seems to have been impacted by businesses bringing forward spending to try and beat expected hikes in costs as the Strait of Hormuz remained blocked.
“Consumers anticipating fresh price increases have already started changing their spending habits. Many are padding out savings pots when they can and cutting back on discretionary spending, a trend that is expected to become more prevalent as the months go on. It is hoped that the World Cup, which kicked off yesterday, will give a much-needed boost to the hospitality sector over the coming weeks. But there is a concern that late kick-offs may result in more than a few sick days being taken by workers which could weigh on growth.
“Whilst the Bank of England is expected to hold fire on raising interest rates next week, the housing market has already come under pressure from higher mortgage costs and the bump in growth enjoyed by the construction sector in April came from maintenance and repair work. April’s data hints at what is to come, a summer of sluggishness which could edge into a technical recession as global conflict collides with domestic political uncertainty.”
Richard Pike, sales and marketing director at Phoebus Software, said:
“These figures present a mixed picture for the UK economy. On the one hand, quarterly growth of 0.7% shows that the economy has carried strong momentum through from the start to the year. However, a slowdown in April was always on the cards, as energy cost shocks start to feed through into the UK economy. The impact of rising costs following the Iran conflict is clearly starting to bite, with households tightening their belts.
“We’ve already seen signs of this in retail, and with fuel costs surging, it’s no surprise that activity has softened. The concern is that this loss of momentum could persist. With the cost of living rising again and business costs under pressure, confidence is likely to remain fragile over the coming months. That has clear implications for the housing market, where affordability and certainty are key drivers of activity.”
Jeremy Batstone-Carr, European Strategist at Raymond James Investment Services, said:
“Today’s data confirms that spillover effects from the Iran war and the associated energy price shock, coupled with uncertainty surrounding Sir Keir Starmer’s future as Prime Minister, have had a combined adverse impact on the UK economy.
“As foreshadowed by recent business surveys, UK economic activity slipped from a strong end to the first quarter, into a shallow contraction at the start of the second. Although the ONS highlights weakness in administrative and support services, the key factor impacting today’s outcome is the extent to which higher energy prices have hit consumers’ real incomes. Having grown over the first quarter by 0.6%, today’s data confirms a pronounced slowdown in consumer-facing services.
“Higher petrol and diesel prices have impacted everybody and resulted in a clear desire to cut back on spending elsewhere. Retail sales data has confirmed weakness on the high street, and today’s figures confirm that output across other services including restaurants, hotels and other entertainment sectors had been adversely impacted as well.
“In partial contrast, the industrial and manufacturing sectors trod water. In large part resilience reflects inventory stockpiling, as the conflict in the Middle East entered its second month without resolution. Beyond that, manufacturing and mining have rebounded as anticipated, offset by weakness in electricity and water supply.
“The UK’s uncertain political outlook has impacted business investment decisions and contributed to households seeking to rein in spending. While the temperature at Westminster has cooled, the upcoming Makerfield by-election next week will turn the spotlight back on the Government. Interest rate setters will have an unenviable job on their hands when they meet to assess monetary conditions next week. One the one hand, inflation and more expectations are rising, but on the other, the economy is clearly weakening, the labour market is softening and wage growth is decelerating.
“While a small 0.25%-point rate increase is possible as an insurance against rising inflation it is far from a foregone certainty. The Bank will wish to emphasise the two-sided nature of the decision, likely limiting the scope for a more aggressive policy response in the months ahead.”
Derrick Dunne, CEO of YOU Asset Management, said:
“This set of figures is in line with most expectations and shows some signs of healthy growth in the UK economy. There is a significant caveat, however. The April data shows some of the effects of the Middle East crisis feeding through into curtailing growth and economic confidence. The monthly figures should be taken with a heavy pinch of salt as they’re always volatile and liable to revision – but this could be the high-watermark for solid economic growth this year.
“Rising energy prices will curtail this growth and potentially feed inflation – or at least put a floor under current expectations. With the Bank of England keeping its powder dry, the situation is finely balanced. There is one positive note in the ONS data though – construction output. These figures had been retrenching for months but have shown the green shoots of recovery. Construction is a leading indicator of what is happening in the economy so there is some evidence of renewed momentum. Unfortunately, whether the current geopolitical crisis snuffs this out remains to be seen.
“Anyone unsure what this could mean for their long-term financial plans should consider consulting with a financial planner.”
Garry White, Chief Investment Commentator at Charles Stanley, part of Raymond James Wealth Management, said:
“After a stronger‑than‑expected first quarter, GDP contracted by 0.1% month‑on‑month in April, underscoring a loss of momentum as the economy entered the second quarter as rising energy costs and geopolitical tensions weighed on consumer spending. The fall was driven by a 0.2% decline in services, partially offset by a 0.1% increase in construction, while production was unchanged.
“April’s data reinforces the view that underlying growth remains sluggish, consistent with forecasts for expansion of less than 1% this year – and aligns with recent business surveys pointing to weakening activity and softer demand.”
Kevin Brown, savings expert at financial mutual Scottish Friendly, said:
“While GDP fell on a monthly basis in April for the first time since the end of last summer, the quarterly picture tells a more encouraging story. The economy actually grew 0.7% in the three months to April, driven by a resilient services sector and a construction industry that has now strung together consecutive months of growth following a period of contraction.
“Despite this, the economy is facing considerable headwinds, the most serious of which is the conflict in the Middle East, which is acting as a chokepoint in the global economy that is pushing up energy prices, disrupting supply chains and spooking policymakers. Yesterday, the European Central Bank became the first G7 central bank to raise rates in response, citing inflationary pressures stemming from the Middle East conflict. That decision will not have gone unnoticed on Threadneedle Street.
“Even so, we expect the Bank of England’s Monetary Policy Committee to hold rates when it meets next week. UK inflation remains above the 2% target but has not spiralled because of the conflict, while the economy is holding up relatively well, all things considered. Increasing rates would act as an anchor on the economy and a fragile labour market.
“For UK households, the message is the same regardless of what the MPC decides: build a financial buffer if you can and make sure your money is working as hard as possible, whether that means shopping around for a better savings rate or putting spare cash to work in the stock market for the long term.”
