UK—Q2 GDP Growth in Line With Expectations at +0

Economics Research 13 August 2026 | 10:14AM BST

UK—Q2 GDP Growth in Line With Expectations at +0.4%; Firmer June Figures Provide Stronger Starting Point for Q3

BOTTOM LINE: Real GDP rose by 0.4%qoq in Q2, matching our forecast and James Moberly | consensus. The June monthly growth figure surprised notably to the upside with a Goldman Sachs International 0.3%mom expansion driven by strength in services activity, with the ONS noting some signs of a diminishing impact from the Middle East conflict and a boost from the FIFA World Cup. But a modest downward revision to the May figures meant that the quarterly data were in line with expectations on rounding. The quarterly expenditure breakdown showed strong growth in gross fixed capital formation (+1.2%qoq) driven partly by increased investment in ICT equipment and other machinery, while household consumption also increased (+0.3%). Looking ahead, the firmer monthly June figures imply a stronger starting point for Q3. We consequently raise our Q3 GDP tracking estimate to +0.3%qoq (from +0.1%), in line with the prediction from our nowcasting model. We then expect growth to slow to +0.2%qoq in Q4 given continued monetary policy restriction and weak real disposable income growth.

GDP (June): +0.3%; GS: 0.0%; Consensus: -0.1%; Previous (May): 0.0% (revised down from +0.1%); all %mom (non-annualised)

GDP (Q2): +0.4%; GS: +0.4%; Consensus: +0.4%; Previous (Q1): +0.6% (unrevised); all %mom (non-annualised)

1. Quarterly GDP rose by 0.4%qoq in Q2, in line with expectations. The June monthly figure showed a 0.3%mom expansion, against our forecast for unchanged output and consensus expectations for a modest contraction. But a slight downward revision to the May monthly growth number meant that the quarterly figure was in line on rounding.

2. The stronger June monthly data resulted from a rise in services output (+0.4%mom), with partial offset from weaker activity in the production (-0.2%) and construction (-0.1%) sectors. Services strength was driven by professional, scientific and technical activities, administrative and support services, and the information and communications industry.

3. The ONS noted that fewer respondents to the Monthly Business Survey mentioned an impact from the Middle East conflict in June compared with previous months, while some businesses pointed to a boost from the FIFA World Cup. Respondents in a number of industries indicated a positive impact from warm weather, although this was cited as a drag on output in the construction and education sectors.

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4. The downward revision to the May monthly number reflected softer growth in services and a larger contraction in production output than initially estimated.

5. The quarterly expenditure breakdown showed that growth was driven by increases in gross fixed capital formation (+1.2%qoq) and household consumption (+0.3%), while government consumption declined slightly (-0.3%). Net trade excluding non-monetary gold was unchanged as a share of GDP. The ONS noted that growth in gross fixed capital formation was driven partly by increased investment in ICT equipment and other machinery and equipment.

6. Looking ahead, the firmer monthly June figures imply a stronger starting point for Q3. We consequently raise our Q3 GDP tracking estimate to +0.3%qoq (from +0.1%) previously, in line with the prediction from our nowcasting model. We then expect growth to slow to +0.2%qoq in Q4 given continued monetary policy restriction and weak real disposable income growth. Our updated estimates imply 2026Q4/Q4 real GDP growth of 1.5% (vs. 1.4% previously).

Exhibit 1: Our Nowcasting Model Implies Growth of +0.3%qoq in Q3

Source: Goldman Sachs Global Investment Research

*Simone is an intern on the European Economics team

Sven Jari Stehn Filippo Taddei Alexandre Stott Goldman Sachs International Goldman Sachs International Goldman Sachs Bank Europe SE - Paris Branch

James Moberly Niklas Garnadt Katya Vashkinskaya Goldman Sachs International Goldman Sachs Bank…