UK economy records surprise 0.3% growth in first month of the Iran war

The UK economy unexpectedly grew during the first full month of the Iran war, according to official figures, suggesting the Middle East conflict has not yet affected growth as much as feared. Figures from the Office for National Statistics (ONS) showed growth of 0.3% in gross domestic product (GDP) in March, from a revised 0.4% rise in February and 0% growth in January. The ONS had originally estimated that the economy grew 0.5% in February and 0.1% in January. The figure for March was significantly better than economists’ expectations, which had forecast GDP would shrink by 0.2%. Over the first three months of 2026, GDP rose 0.6%, up sharply from growth of 0.1% in the final three months of last year. It also grew by 1% compared with the same quarter in 2025. The ONS said that growth in the first quarter was “led by broad-based increases across the services sector”. It added that the computer programming and advertising industries “performed particularly well”, while construction returned to growth. However, there was a 2.2% drop in sports activities, amusement and recreation activities, suggesting consumers are cutting back on discretionary spending over fears of coming higher inflation. The March figure is one of the first official signs that the Iran war – which broke out on the final day of February – is not affecting activity for businesses and consumers as badly as expected, despite soaring oil and gas prices due to the closure of the strait of Hormuz. …