The UK economy contracted by 0.1% in April as the effects of the Iran war began to impact growth, official figures have shown.
It follows growth of 0.3% in March and 0.4% in February and marks the first monthly fall since August 2025.
The Office for National Statistics said the fall was driven by a 0.2% fall in services, which was partially offset by a 0.1% rise in construction. Production showed no growth during April.
While the quarterly picture was more positive, with the economy growing 0.7% in the three months to April, there are growing concerns that April’s figure suggests weaker growth to come.
Danni Hewson, head of financial analysis at AJ Bell, said: “One month’s data would usually be treated with an abundance of caution, but rising prices associated with the conflict in the Middle East are expected to continue putting pressure on a fragile UK economy in the months ahead.
“There had been verdant green shoots at the start of the year, but they came after months of pre-Budget nervousness and increased employment costs which have had a big impact on the labour market. March’s stronger than expected growth seems to have been impacted by businesses bringing forward spending to try and beat expected hikes in costs as the Strait of Hormuz remained blocked.
“April’s data hints at what is to come, a summer of sluggishness which could edge into a technical recession as global conflict collides with domestic political uncertainty.”
Stuart Clark, portfolio manager at Quilter, echoed the sentiment: “While the three-month growth has held up, the first quarter of the year is looking very much like a false dawn, and with repeated resolutions between the US and Iran failing to pass, conditions are going to remain tough for longer still.
“We expect the economy to continue to fade as the year goes on, and particularly for as long as there is no lasting peace deal in the Middle East. Even if a deal is to materialise, costs have increased and are unlikely to come back down to levels seen prior to the conflict, and as such growth will be constrained regardless. With higher energy costs hitting businesses, and a rise in the energy price cap looming for households, growth is likely to grind to a halt once again.”
Kevin Brown, savings expert at Scottish Friendly, commented: “The economy is facing considerable headwinds, the most serious of which is the conflict in the Middle East, which is acting as a chokepoint in the global economy that is pushing up energy prices, disrupting supply chains and spooking policymakers.
“Yesterday, the European Central Bank became the first G7 central bank to raise rates in response, citing inflationary pressures stemming from the Middle East conflict. That decision will not have gone unnoticed on Threadneedle Street.
“Even so, we expect the Bank of England’s Monetary Policy Committee to hold rates when it meets next week. UK inflation remains above the 2% target but has not spiralled because of the conflict, while the economy is holding up relatively well, all things considered. Increasing rates would act as an anchor on the economy and a fragile labour market.”
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