| Consensus | Consensus Range | Actual | Previous | |
| Quarter over Quarter | 0.6% | 0.6% to 0.6% | 0.6% | 0.6% |
| Year over Year | 1.1% | 1.1% to 1.1% | 0.9% | 1.2% |
Highlights
The UK economy made a stronger start to 2026, with GDP expanding by 0.6 percent in the first quarter and 0.9 percent over the year, confirming that economic activity has gained momentum after a subdued end to 2025. The expansion was broad-based, with services leading growth at 0.8 percent, while production and construction also contributed positively, signalling improving business activity across the economy. Annual GDP growth for 2025 was revised marginally lower to 1.3 percent, suggesting that the broader recovery remains gradual rather than robust.
However, beneath the stronger headline growth, household finances present a less favourable picture. Real household disposable income per person declined by 0.8 percent, while the household saving ratio fell to 8.9 percent, indicating that households increasingly relied on accumulated savings to sustain consumption amid persistent cost-of-living pressures. Although real GDP per head increased by 0.6 percent during the quarter and 0.7 percent year-over-year, the divergence between rising economic output and weakening disposable incomes suggests that the benefits of growth have yet to translate into stronger household purchasing power.
To summarise, the latest data point to a resilient but uneven recovery. Stronger economic output provides a positive foundation for business confidence and investment, but weakening household finances remain a key downside risk to the durability of domestic demand and the sustainability of future economic growth. These updates take the RPI to minus 16 and the RPI-P to minus 3.
Market Consensus Before Announcement
The final revision for Q1 is expected to show no change from the 0.6 percent Q/Q figure but the year/year is seen at 1.1 percent versus 1.2 percent reported previously.
Definition
Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. Since 2018, the first, or provisional, estimate includes the GDP expenditure components as well as data on the main output sectors. These results are updated in the second, and final, report.
Description
GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Stock market Investors like to see healthy economic growth because robust business activity translates to higher corporate profits. The GDP report contains a treasure-trove of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. These data are readily comparable to other industrialized countries. GDP components such as consumer spending, business and residential investment, and price (inflation) indexes illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.
Each financial market reacts differently to GDP data because of their focus. For example, equity market participants cheer healthy economic growth because it improves the corporate profit outlook while weak growth generally means anemic earnings. Equities generally drop on disappointing growth and climb on good growth prospects.
Bond or fixed income markets are contrarians. They prefer weak growth so that there is less of a chance of higher central bank interest rates and inflation. When GDP growth is poor or negative it indicates anemic or negative economic activity. Bond prices will rise and interest rates will fall. When growth is positive and good, interest rates will be higher and bond prices lower.
Currency traders prefer healthy growth and higher interest rates. Both lead to increased demand for a local currency. However, inflationary pressures put pressure on a currency regardless of growth. For example, if the UK reports that the consumer price index has risen more than the Bank of England's 2 percent inflation target, demand for sterling could decline. Similarly, when the Bank of England lowers interest rates, the pound sterling weakens. (Currency traders also watch the interest rate spread between countries.)