UK economy contracts in April as war hits growth

What's happened

The UK economy has contracted by 0.1% in April, with services shrinking 0.2% and manufacturing up 0.4% while the war in the Middle East disrupts activity. Analysts expect slower growth ahead, with the Bank of England expected to hold rates.

What's behind the headline?

Critical analysis

• The data marks a setback after a strong first quarter, implying that early optimism about the economy’s resilience is fading as the Iran war constrains services and energy costs rise.
• The biggest drag comes from arts, entertainment, and recreation—sports events in the Middle East have been cancelled, hurting output in the services sector.
• Manufacturing shows relative strength, suggesting a possible sectoral divergence as energy costs bite but domestic demand holds in some areas.
• Policy implications point to a likely hold on rates in the near term, with potential risk of later hikes if inflation stays stubborn and employment tight.
• For readers, the key takeaway is that higher energy costs and disrupted services will weigh on living standards this year, even as some sectors adapt.

How we got here

Official figures from the Office for National Statistics show April’s dip follows a 0.3% rise in March, 0.4% in February, and solid Q1 growth. The Iran conflict has disrupted energy markets and events, weighing on services. Analysts anticipate a continued slowdown through 2026 as global tensions persist.

Our analysis

The Mirror quotes economists and policymakers arguing for targeted relief and fiscal support; CNBC highlights the services drag and manufacturing resilience; The Guardian frames the GDP decline in the context of the Iran war and energy price pressures.

Go deeper

• How is the government planning to shield households from higher energy bills?
• What does this mean for your wallet this summer?
• Which sectors are likely to lead growth in the coming months?

More on these topics

• United Kingdom - Country in Europe

  The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom or Britain, is a sovereign country located off the north­western coast of the European mainland.

• Office for National Statistics

  The Office for National Statistics is the executive office of the UK Statistics Authority, a non-ministerial department which reports directly to the UK Parliament.

• Rachel Reeves - Member of Parliament of the United Kingdom

  Rachel Jane Reeves is a British Labour Party politician serving as Shadow Chancellor of the Duchy of Lancaster and Shadow Minister for the Cabinet Office since 2020. She has been the Member of Parliament for Leeds West since 2010.