GDP in the UK has grown by 0.6% in the three months to March with experts saying the construction sector’s return to growth is a “relief” – but warned that “this will be temporary success once the real effect of the Middle East conflict bites into our economy”.
In the three months to March 2026, compared with the three months to December 2025, real gross domestic product (GDP) grew by 0.6%, following a growth of 0.5% in the three months to February 2026 and a growth of 0.4% in the three months to January 2026, new figures show.
Services output grew by 0.8%, after showing a growth of 0.6% in the three months to February 2026.
Production output grew by 0.2%, following a growth of 1.1% in the three months to February 2026.
Construction output grew by 0.4%, following five consecutive three-monthly falls, including the three months to February 2026 falling by 1.9%.
Crucially, these figures are before the effects of the Iran war, and the subsequent rise in oil prices and inflation, are fully taken into account in the data.
Construction growing after five consecutive falls is a relief
Craig Fish, Director at London-based Lodestone Mortgages, said the return to growth in the construction sector is a “relief”.
He added: “Quarter one (Q1) GDP growth of 0.6% is welcome, but one swallow doesn’t make a summer. January and February did the heavy lifting, and March was already showing production falling, the first month feeling the full weight of Middle East conflict and energy price rises.
“The International Monetary Fund (IMF) made its sharpest downward revision for any G7 economy right here in the UK, and independent forecasters have slashed their full-year outlook to just 0.6%. At best, future quarters look flat.
“Construction growing after five consecutive falls is a relief, but one positive quarter doesn’t make a recovery. The housing sector needs sustained growth to make any dent in supply, and we’re nowhere near that. Don’t be fooled by the headline number.”
Justin Moy, Managing Director at Chelmsford-based EHF Mortgages, warned that the positive news is only “temporary” due to the impending effects of the Iran war.
He said: “This looks on the face of it a mildly positive performance for Q1, but this will be temporary success once the real effect of the Middle East conflict bites into our economy.
“Annual GDP targets have already been scaled back, the ripple of higher energy prices, tax rises and increases in borrowing costs will plunge the UK in reverse for the remainder of 2026.”
This will be temporary success
Riz Malik, Independent Financial Adviser at Southend-on-Sea-based R3 Wealth, also pointed out that this data was before the effect of the Iran war feeds into the data.
He added: “Although our Prime Minister will revel in this data, we need to factor in that this was BI (before Iran) and this highlights the trajectory we could be on had it not been for Trump’s conflict in the Middle East.
“Although it may seem calm at present we must remember it was also calm on the Titanic before it hit the iceberg.”
Chris Barry, Director at London-based Thomas Legal, predicted that next month’s figures will not be so positive.
He said: “UK GDP growth will be positively received and will drive more confidence into markets, including property. Services and construction were strong, however the full impact of increased borrowing costs and global uncertainty were not entirely felt in this data, meaning the next data release is unlikely to be as positive.
“In real time, the market continues to hold strong and those who are holding off a move, are deciding to improve their current property which benefits the economy enormously.”
Don’t be fooled by the headline number
David Stirling, Independent Financial Adviser at Belfast-based Mint Wealth, joked that Starmer will be celebrating the news despite the growth being small.
He added: “Keir Starmer will no doubt be reaching for the champagne after today’s GDP figures showed the UK economy growing by a whopping 0.6%.
“Proof, if ever it were needed, that the government’s economic strategy is firing on all cylinders, assuming those cylinders are very small and moving quite slowly.”
