UK economy contracts in April as Middle East shock weighs on activity

The UK economy contracted in April, ending its strong start to the year as effects of higher energy costs due to the Middle East conflict began to weigh on activity, official data showed on Friday.

The gross domestic product (GDP) fell 0.1% month-on-month in April, following increases in February and March, the Office for National Statistics (ONS) said. The reading, however, was in line with market expectations.

Services output, the largest part of the UK economy, declined 0.2%, offsetting gains in production and construction.

The decline pointed to a weaker start to the second quarter after the economy expanded 0.6% in the first quarter of 2026, when it recorded the strongest growth among Group of Seven economies.

In the first quarter, all three main sectors contributed to growth, led by a 0.8% rise in services output. Production grew 0.2%, while construction increased 0.4%.

Businesses and households have faced higher energy prices and borrowing costs since the Iran war, which has added pressure to inflation expectations and complicated the outlook for monetary policy.

The Bank of England has been under pressure to respond to the energy-driven price shock, but weaker activity may limit the scope for aggressive rate increases.