The UK economy beat expectations with 0.4% growth in July, official data has shown.
New figures from the Office for National Statistics show the UK economy bucked expectations that it would stagnate in July, following growth of 0.3% in June and no growth in May.
Compared to the same month a year ago, GDP is estimated to be 1.6% higher in July 2026, the ONS said.
Growth was experienced in all three sectors, although services proved the strongest with a rise of 0.4% during July, driven by particularly strong computer programming. Production grew by 0.2%, while production saw a 0.1% uplift during the month.
On a longer-term basis, the ONS said that in the three months to July, the economy grew by 0.4% compared with the previous three months.
Richard Carter, head of fixed interest research at Quilter Cheviot, said: “The concern was that the UK was likely to experience another year when the economy runs out of steam when it comes to growth.
“After a better than expected first half last year, the economy spluttered to a halt in the latter half. But tentative signals are that things may be different this time around, despite the geopolitical situation showing no sign of abating. Growth is going to be hard to come by so this may not last, especially as activity is likely to stall ahead of the Budget.”
Carter said markets will be focusing closely on the Budget at the end of October.
“Chancellor John Healey looked to assure markets that current borrowing concerns are being listened to and that the new Government understands the fiscal position the UK finds itself in. With the energy price cap surging by 13% in July and oil prices continuing to climb higher, inflation concerns are once again being sparked.
“With the Bank of England poised to raise rates at least once this year, and business and consumer confidence already subdued, the growth conundrum is going to linger for the foreseeable future despite today’s positivity.”
Danni Hewson, head of financial analysis at AJ Bell, said of the data: “Whilst it is important not to talk down the resilience of the UK economy it is as important not to ignore underlying issues which were expected to show up in today’s figures and are still expected to impact growth in the second half of the year.
“The next few months are expected to be challenging for a government committed to delivering growth, battling a difficult geopolitical backdrop and rising borrowing costs which will limit the chancellor’s ability to deliver the kind of measures business groups say are needed to stop the economy from stalling altogether.”
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