GDP grew by 0.1% in May despite the Iran war but experts warn that, while the rise is “encouraging”, the UK is still a “stagnant economy”.
Monthly GDP grew by 0.1%, following an unrevised fall of 0.1% in April 2026 and an unrevised growth of 0.3% in March 2026, data released today show.
This is despite the Iran war raging since the end of February – it had been expected to hit the UK economy harder.
The growth in May was because of a rise of 0.3% in services and was partially offset by falls of 0.5% in production, and 0.8% in construction.
The largest positive contribution to services sector output in May 2026 came from professional, scientific and technical activities, which grew by 1.8%. This was driven by a growth of 5.1% in scientific research and development, reaching its highest peak since June 2025.
But production output fell by 0.5% in May 2026, driven by falls in mining and quarrying (down 4.6%), water supply (down 2.4%) and electricity, gas, steam and air conditioning supply (down 0.1%).
Construction output decreased by 0.8% in May 2026, driven by a decrease in repair and maintenance, which fell by 2.1%.
Anaemic growth
Scott Gallacher, Director at Leicester-based Rowley Turton, said the UK economy is struggling.
He added: “In common with many mature economies, the UK is suffering from anaemic growth. Politicians of every party promise to get the economy moving, but the much harder question is how meaningful and sustained growth can actually be achieved.
“Andy Burnham may be arriving in Downing Street with renewed political momentum, but he inherits exactly the same economic problem. For ordinary people, a 0.1% monthly increase will feel largely academic.
“Until growth feeds through into better wages, greater job security and rising living standards, few will feel that the economy is genuinely improving. And until that happens, whichever politicians are in charge, regardless of political colour, will remain under intense pressure to deliver.”
Graham Nicoll, Financial Planner, Chartered FCSI at NCL Wealth Partners, said the most important thing is whether households and businesses start to feel more confident.
He added: “These figures do not suggest a meaningful economic recovery, they point to a fairly stagnant economy. A 0.1% monthly rise in GDP is marginal and, given the falls in production and construction, highlights that growth remains fragile and uneven.
“Services are keeping the economy moving, but the weakness in key sectors raises concerns about investment, productivity and business confidence. For the average person, this is unlikely to feel like progress. GDP growth of this level does little to improve living standards, create significant wage growth or ease financial pressures.
“The real measure of recovery will be whether households and businesses start to feel more confident, not just whether the economy avoids contraction.”
Fragile
Lukas Kaminskis, CEO at Turing College, said the economy is “fragile”.
He added: “A modest 0.1% rise is still encouraging, particularly after April’s contraction, but it also shows that the UK economy is moving at a fragile pace. Businesses cannot afford to wait for economic conditions to become perfect before investing in productivity.
“Growth is still being driven unevenly, with services offsetting weakness elsewhere in the economy, and that underlines the need for companies across all sectors to become more efficient and data-led.
“AI is often spoken about as a job killer, or a way to rapidly streamline a business, but it will only deliver results if a workforce knows how to apply it in practical, commercially useful ways. Technology alone cannot solve the UK’s productivity challenge.
“For many employers, the priority now should be building capability within their existing teams. Practical upskilling can help businesses make better decisions, automate routine work and improve efficiency, which is exactly what they need in a low-growth environment.”
Craig Fish, Director at London-based Lodestone Mortgages, said mortgage borrowers could see their rates continue to go up.
He added: “This isn’t an economy accelerating, it’s one shuffling along and hoping nobody notices. 0.1% growth sounds fine until you see its services doing all the work while construction fell 0.8% and production fell 0.5%. That’s not a recovery, it’s one sector propping up two others.
“Markets are now pricing in two base rate rises, one later this year and one early next year, and unless something changes, that could become reality rather than just a forecast. For mortgage borrowers, it means the assumption of imminent cuts needs a rethink. My advice to clients stays the same: get your finances in order now and be ready to act, rather than waiting on a cut that might not land when you expect it.”
Clinging on
Harry Goodliffe, Director at Winchester-based HTG Mortgages, said the UK economy is stuck in a cycle of weak growth.
He added: “This isn’t an economy growing with confidence, it’s an economy clinging on. A headline GDP increase of 0.1% masks the fact that construction and production are both shrinking.
“That’s particularly worrying for housing because if builders are slowing down, we’re only making an already undersupplied market worse. For most households, these figures change nothing. The economy remains stuck in a cycle of weak growth and high costs.”
