Discover why the UK economy grew by 0.6% in Quarter 1 2026, which sectors contributed, and what the price indicators reveal about underlying inflationary pressures
The Office for National Statistics estimates that real GDP increased by 0.6% in Quarter 1 (Jan to Mar) 2026, following a revised 0.2% rise in Quarter 4 (Oct to Dec) 2026. On an annual basis, real GDP for 2026 is estimated to have grown by an unrevised 1.4%, while growth in 2026 has been revised to 1.0% (previously 1.1%).
The ONS also reports that real GDP per head rose by 0.6% in Quarter 1 2026 and is 0.9% higher than in the same quarter a year earlier. These figures set the backdrop for a quarter where the services sector provided the largest boost to overall output.
The early monthly indicators show GDP growth of 0.3% in March 2026 after +0.4% in February and no growth in January. In line with the ONS revision policy, data from Quarter 1 (Jan to Mar) 2026 through Quarter 4 (Oct to Dec) 2026 have been updated, with small adjustments of plus or minus 0.1 percentage points across those quarters.
The ONS explains its seasonal adjustment and monitoring work in a methodological blog, drawing on international practice and academic input. Users should note that first quarterly estimates can be revised; historically the mean absolute revision after three years is around ±0.28 percentage points.
Headline growth and price movements
Nominal output rose by 1.6% in Quarter 1 2026 and is 4.6% higher than the same quarter a year earlier. The broadest measure of domestic price change, the implied GDP deflator, increased by 3.5% compared with Quarter 1 2026. The rise in the deflator reflects higher spending across households, gross capital formation, general government consumption and exports. The implied GDP deflator is the comprehensive price index that captures changes in prices for all goods and services produced domestically, including shifts in the relative price of exports and imports.
Output across the economy
Overall output increased by 0.6% in Quarter 1 2026, with gains in 14 of 20 subsectors. The three main categories—services, production and construction—all contributed positively: services rose by 0.8%, construction by 0.4%, and production by 0.2%. This spread of growth points to a quarter where consumer and business activity supported expansion, while some specific industries faced headwinds.
Services: where the expansion came from
The services sector expanded by 0.8% in Quarter 1 2026 and is estimated to be 1.4% above the level a year earlier. Both consumer-facing services (+0.8%) and non-consumer-facing (business-facing) services (+0.7%) contributed. The largest positive driver was the wholesale and retail trade; repair of motor vehicles and motorcycles subsector, which rose by 2.0%, supported by a 3.1% increase in wholesale trade and 1.6% growth in retail trade. Despite this quarter’s rise, that subsector remains slightly below 2026 levels. Meanwhile, administrative and support service activities fell by 1.0%, driven by lower rental, leasing and employment services.
Production and construction nuances
The production sector grew by 0.2%, with manufacturing up 0.8% and electricity, gas and steam supply up 0.6%. Offsetting pressures included a 4.5% decline in mining and quarrying and a 0.5% fall in water and waste services. Within manufacturing, 8 of 13 subsectors contributed positively; the largest uplift came from the manufacture of transport equipment, which rose 5.7%, driven by a 10.9% jump in motor vehicles. That substantial increase reflects a base effect when comparing with October 2026, a month still recovering from a cyber incident earlier that year. The construction sector increased 0.4% in the quarter but remains 1.3% below its level a year earlier. Repair and maintenance rose 3.4%, led by private housing repair (+4.1%), while new work fell by 1.9%, with private new housing down 2.6%.
Expenditure patterns and trade
Expenditure contributed 0.6% to GDP growth in Quarter 1 2026. The main drivers were increases in gross capital formation: other, household final consumption, and government consumption. Within the ‘other’ category, acquisitions less disposals of valuables rose by £4.5 billion between Quarter 4 2026 and Quarter 1 2026; this item is largely composed of non-monetary gold, which tends to be an erratic series and is neutral for GDP because it appears in both capital formation and net trade.
Household, government and investment details
Real household consumption grew by 0.6% in the quarter and is up 0.9% annually, with increases across categories such as miscellaneous goods, food and drink, recreation and culture, and transport. Real government consumption rose by 0.4% and is estimated to be 1.4% higher year-on-year, mainly reflecting education, health and social care. Within gross fixed capital formation, GFCF fell by 0.6%, affected by declines in intellectual property products and dwellings. Business investment rose by 0.7% in the quarter but remains 1.8% below the same quarter a year earlier. Inventories increased by £2,352 million, according to early estimates.
Trade balance note
The UK’s trade deficit for goods and services is estimated at 1.8% of nominal GDP in Quarter 1 2026. That headline figure includes non-monetary gold and other precious metals, so analysts often examine the balance excluding these volatile items for a clearer picture of trade trends.
