Reeves Memperingatkan Risiko Terhadap Stabilitas Ekonomi dengan Pertempuran Kepemimpinan, setelah Pertumbuhan Inggris Melebihi Ramalan pada Maret

Some economists have doubts about today's UK GDP report.

The issue is that this data has a habit of showing strong growth early in the calendar year, and weaker growth later.

That has raised suspicious that the Office for National Statistics are botching their seasonal adjustments – changes to the data to smooth out regular factors that boost, or suppress, growth.

James Smith, developed markets economist at ING, says we should be sceptical about the claim that the UK grew by 0.6% in January-March.

Smith writes:

We just aren't convinced by the UK's first quarter growth performance. GDP rose by 0.6%, up from 0.2% in the fourth quarter of 2025.

It follows a now-familiar pattern; since 2022, UK growth figures have come in much stronger in the first three months of the year than the rest. Growth has averaged 0.6% in Q1 over that period, a sharp contrast to Q3 where the economy has typically flatlined.

Why? It's hard to say exactly what's happening. But it seems that something's not quite right with the way the data is being seasonally-adjusted, a legacy we suspect of higher inflation and the timing of annual price hikes.

The ONS appears to be taking this issue seriously too.

This morning, the statistics body says it is assessing its approach to seasonal adjustments, and has made some changes – which mean it has lowered its forecast for growth in the first quarter of 2024 and 2025.

The ONS's James Benford writes:

In today's release, having seen another strong out turn in the first quarter, our seasonal adjustment process has reassessed the seasonal factors for past quarters and, as a result of this and other updates, now show headline GDP growth of 0.7% in 2024 Q1 (previously estimated at 0.8%) and 0.6% in 2025 Q1 (previously estimated at 0.7%).

Today's GDP reports shows that the UK economy entered the period of the Iran conflict with “considerable momentumâ€, says Sandra Horsfield, economist at Investec.

Horsfield says growth across the economy in March was “fairly broad-basedâ€, explaining:

The service sector, which makes up the bulk of GDP, saw output expand by 0.3%, and within that 11 out of 14 subsectors recorded higher output.

Meanwhile, whereas industrial production fell by 0.2%, this was due to falls in the volatile mining and quarrying and utility components; manufacturing posted a strong monthly gain of 1.2%.

Construction too expanded, at a rapid clip of 1.5%. This builds on growth of 0.7% in January and 0.5% in February, although it has to be seen in the context of what had been a fairly material fall in new work in Q4 2025 which has now only partially unwound – the level of new work was still down 4.5% lower in March than in September.

One of the UK's leading businesswomen has warned that political turmoil is damaging for companies.

With leadership battle speculation swirling, Aviva CEO Amanda Blanc told Reuters:

“There have been too many changes of government strategy, leadership, just in my six years of being CEO, and I think that is harmful to a major economy such as the UK and how we are perceived abroad.â€

“We don't operate in a vacuum, and we think it's very important that we get some stability.â€

Blanc also pointed to the turmoil in the bond markets four years ago, after Liz Truss's mini-budget, saying:

“We've only got to look at the market reaction to the mini-budget… these are the sort of things that really matter.â€

Chancellor Rachel Reeves also warned this morning that a leadership battle could plunge the UK ‘into chaos', and threaten its economic recovery.

Asked by the BBC about the possibility that health secretary Wes Streeting triggers a Labour party leadership race, Reeves argues that the government will be able to invest more in public services and help households and businesses because of the pick-up in growth.

But, she argues, that's only possible because of the economic stability the government has brought back.

Reeves adds:

We shouldn't put that at risk by plunging the country into chaos at a time when there is conflict in the world, but also at a time when our plan to grow the economy is starting to bear fruit.

If UK borrowing costs remain elevated, the chancellor's headroom to keep within the fiscal rules will be squeezed – especially if the economy slows later this year, as economists are warning this morning.

Lindsay James, investment strategist at Quilter, warns that ministers have “few easy optionsâ€:

Tax rises or spending restraint may become harder to avoid if market pressure persists, while any signs of wavering on fiscal discipline could risk further unease in the gilt market. Rachel Reeves is still viewed by many investors as an important anchor for confidence, but the rigidity of the fiscal rules means policy can too often be shaped by short-term moves in fiscal headroom rather than a long-term plan for sustainable growth.

“For investors, the concern is that a fragile domestic recovery is now meeting a much less forgiving global backdrop, at the same time as political risk is again being priced into UK assets.â€

The Office for National Statistics has also spotted signs that the economy may have weakened last month.

James Benford, the ONS's director-general for surveys and economic and social statistics, has written in a blogpost today that consumer demand appears to have dipped in April.

He explains:

We also published in our monthly GDP release today a review of the partial data we have on spending on April which, on balance, point to some weakening going into the second quarter. Indicators of consumer demand suggested some easing during the month.

That is consistent with anecdotal evidence from firms that reported to us a weakening in some areas of consumer spending in March, following the conflict in Iran, that was at least in part offset by stronger spending in other areas due to stockpiling in anticipation of higher prices.

UK government borrowing costs have fallen, slightly, at the start of trading.

The yield (or interest rate) on benchmark 10-year gilts has dropped by 3 basis point (0.03 of a percentage point) to 5.04%.

30-year bond yields are down around 1 basis point at 5.727%, and shorter-dated bond yields are a little lower too.

This matches moves in US bonds this morning.

Earlier this week, the UK 30-year yield hit its highest since 1998 as pressure mounted on Keir Starmer to lay out a timetable for his departure.

The political drama hasn't eased since, with reports that health secretary Wes Streeting may challenge Starmer for the leadership as soon as today.

Another potential candidate, Angela Rayner, has been cleared by HMRC of deliberate wrongdoing or carelessness over her tax affairs:

Rachel Reeves has also suggested she'll announce details of help with the cost of living crisis next week.

Speaking to BBC News this morning, the chancellor says:

Next week I'll be setting out more detail on how, because of the numbers that we've seen today, we'll be able to put more money in to support people – familes and businesses – with the conflict challenges that we know we're facing.

UK household energy bills are expected to jump in July when the price cap is next adjusted. In April, Reeves indicated that any support with energy bills would be based on household income, rather than provided to all.

The chancellor has already announced an expansion of support for the most energy-intensive UK businesses:

Several analysts are warning that Britain's pick-up in growth in January-March may be the best we see this year.

Ruth Gregory, deputy chief UK economist at Capital Economics, says she would be very surprised if growth doesn't weaken from May, adding:

GDP rose by a bumper 0.6% q/q in Q1 (consensus and CE forecast 0.6%), but this will be the high point for the year given the effects of the war in Iran will sap growth from Q2. In our baseline scenario, the economy doesn't grow at all in Q2 and Q3. Prolonged political instability is an extra downside risk to our forecasts.

Michael Brown, senior research strategist at brokerage Pepperstone, also suspects the 0.6% jump in GDP in Q1 will mark the peak in terms of UK growth this year:

Risks remain clearly tilted to the downside moving forwards, principally as a result of the ongoing Middle East conflict, and subsequent surge in energy prices, which will in turn impact the economy in the manner of a significant negative demand shock, over the next couple of quarters.

Added to which, renewed political uncertainty in Westminster is also likely to act as a significant headwind to the economy at large, not only delaying major investment decisions, but with said uncertainty having also resulted in considerably tighter financial conditions as a result of the recent sell-off in gilts across the curve.

Raj Badiani, economics director at S&P Global Market Intelligence, predicts the UK economy will shrink slightly later this year:

The UK economy outperformed in the first quarter of this year with growth reaching 0.6% quarter over quarter, despite being at odds with lacklustre survey indicators during this period. This continues the recent pattern of unexpectedly strong growth in the first quarter of the year, while stockpiling of some goods ahead of anticipated shortages arising from the Iran war lifted demand in March.

“Nevertheless, recession risks have risen, and we now expect the UK economy to contract mildly in the second and third quarters of this year. The main driver is a prolonged energy price shock pushing headline inflation above 4.0% in the coming months, and the resulting pressure on the Bank of England to raise interest rates to counter emerging ‘second-round' effects.

Here's the ONS director of economic statistics, Liz McKeown, on today's UK GDP report:

Growth picked up in the first quarter of the year, led by broad-based increases across the services sector. Within that wholesale, computer programming and advertising performed particularly well.

“Production also grew slightly, while construction returned to growth, though only partly reversing weakness at the end of last year.â€

Chancellor Rachel Reeves can be forgiven for tooting her own trumpet this morning, after the UK economy grew faster than forecast in March.

Following the news that GDP rose by 0.3% in March, and by 0.6% in the first quarter of the year, Reeves says:

Today's strong growth figures show the government has the right economic plan.

The choices I have made as chancellor mean our economy is in a stronger position as we deal with the costs of the war in Iran.

Now is not the time to put our economic stability at risk.

That last sentence sounds like a reproachful glare towards her colleagues who are trying to push the PM, Keir Starmer, out of Downing Street (which could lead to a change of chancellor too…)

Output across the UK's construction output increased by 1.5% in March, the ONS reports, thanks to new building work and repairs.

This morning's GDP report says:

The increase in monthly output in March 2026 came from increases in both new work, and repair and maintenance, which grew by 2.0% and 0.8%, respectively. At the sector level, the main contributor to the monthly increase was private housing new work, which grew by 2.8%.

That follows a fall in new building work in the second half of last year.

UK economic growth picked up on a quarterly basis, the ONS reports.

UK GDP rose by 0.6% in the January-March quarter, up from 0.2% in October-December.

All three main sectors of the economy grew: services output grew by 0.8%; production output by 0.2%; and construction output by 0.4%.

Newsflash: The UK economy kept growing in March, despite the economic damage caused by the Iran war.

UK GDP rose by 0.3% in March 2026, the Office for National Statistics has reported, beating forecasts of a contraction of 0.2%.

That follows growth of 0.4% in February and no growth in January (revised down from growths of 0.5% and 0.1% previously estimated).

The ONS adds.

Services and construction output both grew, by 0.3% and 1.5%, respectively – these growths were partly offset by a 0.2% fall in production.

Bank of England deputy governor Sarah Breeden has declared that interest rates do not need to rise in June or July.

In an interview with the Financial Times, published this morning, Breeden said:

We've got time to understand firstly the size of the shocks and secondly, how the economy is evolving.

“You're obviously correct that we can't wait forever, but we don't need to do it in June or July.â€

Breeden, a member of the Bank's monetary policy committee (which sets interest rates) added that the BOE was “in a good place to be able to watch what's happening in the economyâ€, saying: “We don't need to rush to act.â€

The Iran war, and the resulting jump in borrowing costs, is dampening the UK housing market.

My colleague Tom Knowles reports:

Fears of higher mortgage rates and rising inflation as a result of the Middle East conflict are leading to a subdued and downbeat housing market, according to estate agents.

Demand from potential homebuyers across England and Wales has shown a ‘noticeable softening' recently, according to a monthly survey of estate agents by the Royal Institution of Chartered Surveyors (RICS).

Members have told the professional body that buyers and sellers are becoming more cautious, and many agents have cited clients who are worried about whether inflation and interest rates will rise in the coming months, leading to slower sales, fewer homes on the market, and more price-sensitive buyers.

Good morning. We're about to learn how much economic damage the UK suffered in the early weeks of the Iran war.

The first estimate of UK gross domestic product (GDP) in March, and for the first quarter of the year, is due to be released at 7am.

Economics fear the Middle East conflict, which began at the end of February, will have hit activity in the UK. The consensus is that GDP may have fallen by about 0.2% in March, a reversal of the 0.5% growth recorded in February.

For Q1 as a whole, City experts predict growth of 0.6%, up from 0.1% in October-December 2025.

But the outlook for 2026 looks tough, as economies are hit by rising energy prices, with food inflation set to jump too.

Fergus Jimenez-England, associate economist at the economic forecasting body NIESR, fears the UK economy faces “a year of weak growth and high inflation.â€

The UK economy is in a state of transition. It began the year with some momentum, as business sentiment recovered following the Autumn Budget, but conflict in the Middle East has since stifled that momentum.

As businesses adjust to this latest energy shock, leading indicators are sending mixed signals. Input price inflation has picked up sharply and job vacancies continue to fall, pointing to softer demand conditions ahead. At the same time, retail sales and PMIs have held up, although some of this strength may reflect firms and households bringing forward spending in anticipation of further price rises.â€

The agenda

• 7am BST: UK GDP report for Q1 2026

• 7am BST: UK trade report for Q1 2026

• 9.30am BST: Survey of economic activity and social change in the UK

• 10.30am BST: Resolution Foundation event: ‘Resetting government economic priorities for the remainder of the parliament'

• 1.30pm US retail sales for April

• 1.30pm US initial jobless claims