UK economy grows 0.4% in July, beating forecasts

Britain's economy grew 0.4% in July, monthly figures from the Office for National Statistics showed on Friday, defying expectations of no change from June.

Economists had forecast that gross domestic product would remain flat over the month.

The stronger-than-expected reading follows a solid first half of 2026, during which the UK economy expanded by 1% — the fastest growth among the Group of Seven large advanced economies. Some analysts caution, however, that part of that performance may reflect seasonal effects that have not been fully adjusted for.

In July, the Bank of England projected that the economy would grow 1.1% over the whole of 2026. Earlier this week, Governor Andrew Bailey told a parliamentary committee that economic data since that forecast had come in "a bit stronger" than he had expected.

Like other European economies, Britain has so far absorbed less of a growth hit from the U.S.-Iran war than economists had initially feared. But the conflict this week pushed oil prices above $105 a barrel, feeding through to government borrowing costs. The Bank of England expects inflation to rise to around 3.2% later this year.