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Business

UK economy grows 0.5% in second quarter as ONS revises GDP figures upward

Britain's economy grew by 0.5% in the second quarter of 2026, faster than the 0.4% initially estimated, with stronger services growth, household incomes and business investment.

By Sarah Whitfield · · 1 min read

The Royal Exchange and Bank of England area in the City of London, with a red double-decker bus and modern City skyscrapers behind
The wub, CC BY-SA 4.0, via Wikimedia Commons

Britain’s economy grew faster than initially thought in the second quarter of 2026, the Office for National Statistics said on Wednesday, revising GDP growth up to 0.5% from a first estimate of 0.4%, beating economist forecasts of no revision (https://www.reuters.com/world/uk/uk-economy-grew-by-05-q2-2026-ons-says-2026-09-30/).

Services drove the upgrade: the sector generates about 80% of GDP: services output grew 0.6% in the quarter, with June boosted by hot weather and the World Cup football tournament (https://www.thetimes.com/business/economics/article/uk-economic-growth-revised-upwards-second-quarter-v50cxnfmm, https://www.theoldhamtimes.co.uk/news/national/26593064.uk-economy-grows-faster-first-thought-amid-service-sector-boost/).

The revision cemented Britain as the fastest-growing G7 economy in the first half of 2026 (https://www.reuters.com/world/uk/uk-economy-grew-by-05-q2-2026-ons-says-2026-09-30/).

Household finances also improved. Real household disposable income per head rose 1.0% in the quarter — the biggest increase since the end of 2024 — after a 0.8% fall in the first quarter (https://www.reuters.com/world/uk/uk-economy-grew-by-05-q2-2026-ons-says-2026-09-30/, https://www.thetimes.com/business/economics/article/uk-economic-growth-revised-upwards-second-quarter-v50cxnfmm).

Business investment was revised sharply higher to an annual rate of 5.2% in Q2, from an initial 0.8% (https://www.reuters.com/world/uk/uk-economy-grew-by-05-q2-2026-ons-says-2026-09-30/).

Britain’s current account deficit narrowed to £19.9bn, below the £24.7bn consensus — closing to 1.4% of GDP excluding precious metals, the smallest in five years, helped by services exports (https://www.reuters.com/world/uk/uk-economy-grew-by-05-q2-2026-ons-says-2026-09-30/).

“Stronger services growth in the latest quarter means the economy is now slightly larger than previously estimated,” said Liz McKeown, the ONS’s director of economic statistics (https://www.thetimes.com/business/economics/article/uk-economic-growth-revised-upwards-second-quarter-v50cxnfmm).

It could cheer Chancellor John Healey ahead of October’s budget. The OECD last week raised its UK 2026 growth forecast to 1.1% from 0.9%, while WPI Strategy economist Martin Beck said the revisions strengthened “the evidence that the economy proved more resilient than expected … despite the fallout from the Iran war” (https://www.thetimes.com/business/economics/article/uk-economic-growth-revised-upwards-second-quarter-v50cxnfmm).

Sources

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