What's happening to the UK economy and how does it affect you?

Key developments are emerging from the global stage. What's happening to the UK economy and how does it affect you? 2 hours ago Share Save Add as preferred on GoogleGetty ImagesThe UK economy grew more than expected during the first three months of 2026, official figures show. However, experts remain worried that the US-Israeli war with Iran will mean growth slows or stagnates later in the year.

Economic growth matters because it affects things like pay increases for workers and the amount of tax the government raises to pay for services. What is GDP and why does it matter? UK economic growth is measured by the change in the country's GDP, or gross domestic product.

The Details

This includes all the economic activity of companies, governments and people in a country. In the UK, the Office for National Statistics (ONS) publishes new GDP figures every month. However, these can vary quite a lot and the quarterly figures - covering three months at a time - are considered more significant.

Most economists, politicians, and businesses like to see GDP rising steadily. That's because it usually means people are spending more, extra jobs are created, more tax is paid, and workers get better pay rises. When GDP is falling, it means the economy is shrinking.

This can be bad news for businesses and workers as it can lead to pay freezes and job losses. If GDP falls for two quarters in a row, that is known as a recession. What is happening to the UK economy?

What Experts Say

The UK economy grew by 0. 3% in March, despite the Iran war starting that month. The ONS said there was some evidence that consumers and businesses had brought forward spending in March because of fears that the conflict would put up fuel and food prices.

The March increase followed another unexpected jump in February, and means that GDP grew by 0. 6% during the first three months of the year. That was also higher than predicted.

However, analysts think the conflict will bring down GDP in the next three-month period, between April and June, when further price rises are likely. The Bank of England has already warned that it expects UK inflation to increase as a result of the war, possibly reaching 6% in the worst-case scenario. In April, the International Monetary Fund (IMF) said it expects the war to hit the UK the hardest of the world's advanced economies.

The development has drawn wide international attention, with diplomatic circles watching closely.