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The Guardian World1 min read
UK economy records surprise 0.3% growth in first month of the Iran war
TL;DR
The UK economy grew by 0.3% in March 2026, despite the ongoing Iran war, defying expectations of a contraction. This growth follows a revised 0.4% increase in February and indicates resilience in the services sector.
Key points
- UK economy grew by 0.3% in March 2026
- Growth defied expectations of a 0.2% contraction
- Services sector led the growth
- Computer programming and advertising performed well
- Construction returned to growth
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.
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.
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.
The GDP reading ties in with some business surveys that suggest the economy has managed to maintain momentum despite the Middle East conflict.
The closely watched purchasing managers index (PMI) for the UK showed business activity rising in April due to upturns in manufacturing production and output from the services sector. Retail sales also rose in March, even when excluding the increased cost of fuel, according to the ONS.
However, the Bank of England warned last month that the UK may also need to brace for higher interest rates in the coming months as “higher inflation is unavoidable” because of the war in the Middle East. Inflation in March from 3% in February, after the Iran war triggered the biggest jump in fuel prices for more than three years.
Q&A
What was the UK GDP growth rate in March 2026?
The UK GDP grew by 0.3% in March 2026.
How did the Iran war impact the UK economy in March 2026?
The Iran war did not significantly affect the UK economy, as it recorded unexpected growth during the conflict.
Which sectors contributed to the UK's economic growth in early 2026?
The services sector, particularly computer programming and advertising, contributed to the UK's economic growth in early 2026.
