Tech helps drive surprise growth for the UK

New data from the Office for National Statistics (ONS) shows that Information and Communication output rose 2.7% in the second quarter of 2026. This was the strongest growth of the 14 service subsectors.

In particular, computer programming, consultancy, and related activities helped drive the increase, growing 3.7% over the quarter. Information and Communication was one of the two largest contributors to services growth, alongside professional activities.

UK GDP grew 0.4% in the second quarter of 2026, down from 0.8% from the first quarter, but still above analyst estimates. For context, this is 1.2% higher than the same quarter a year ago.

A welcome surprise

Richard Carter, Head of Fixed Interest Research at Quilter Cheviot, noted that the 0.4% figure was a long way from a lot of the gloom that came in the immediate aftermath of the conflict in Iran and the wider Middle East erupting.

“Services continue to do the bulk of the work for the economy, with production and construction both suffering falls in June. While the growth is nothing to write home about, it is perhaps reflective of the fact that the economy was in a more robust shape than thought given what the first six months have thrown up so far.”

However Carter, cautioned that the UK has been in this position before, with the first half of 2025 delivering a strong level of growth, only for GDP to grind to a halt in the second half.

“It is likely a similar trend may emerge again, even with a new prime minister keen to boost consumer confidence. Businesses have been stockpiling following the disruption to supply chains from the US-Iran conflict.

“With energy prices having moderated and talks of a fresh ceasefire gaining momentum, such activity is unlikely to be repeated. There have also been a number of one-off events helping to contribute, like the World Cup, and the effects of recent heatwaves.”

This was largely echoed by the Resolution Foundation which cautioned that the impact of the Middle East is still likely to be felt.

“Britain’s economy has slowed after a strong start to the year, but growth of 0.4% in the second quarter still leaves the UK leading the pack ahead of its G7 peers,” said Stephen Hunsaker, Economist at the Resolution Foundation.

“The most encouraging news is for living standards, with GDP per capita growing close to its long-run average, notably faster than the stagnant period following the pandemic. But with output still well below our pre-pandemic trend – never mind our pre-financial crisis path – there is still plenty of lost ground to make up.

However, Hunsaker warned that the biggest challenge lies ahead.

“The fallout from the Iran war has raised the possibility of Chancellor Healey losing a quarter of his headroom, putting him on the backfoot at his first Budget this autumn.”

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