UK Growth Surge Under Threat From Iran War, Political Turmoil

Shoppers in the city centre in Croydon, UK. Photographer: Jason Alden/Bloomberg

By Irina Anghel May 14, 2026 at 06:04 AM GMT+8

The UK kicked off the year with a burst of economic growth that is now at risk from the fallout from the Iran war and the prospect of a new prime minister.

Gross domestic product grew 0.6% in the first quarter, a jump from the 0.2% in the previous three months and the fastest expansion for a year, the Office for National Statistics said on Thursday.

The reading was in line with the median forecast of economists and above the 0.5% predicted by the Bank of England.

The strong start of 2026 owes much to a bumper February — before the Iran war began — when the economy grew 0.4%. However, it also expanded 0.3% in March, driven by the services sector. Economists had expected a modest in fall in March

A relatively rosy economic picture is unlikely to shore up Prime Minister Keir Starmer’s position after his Labour Party suffered disastrous losses at last week’s local elections. Starmer now faces a potential challenge to his leadership, with around 100 lawmakers, including four ministers, calling for his departure.

Economists and investors warn that Starmer’s fight for survival will weigh on the UK’s economic outlook. The turmoil has already roiled bond markets, pushing up borrowing costs on longer-dated debt to their highest in decades and above Group-of-10 peers.