The British economy contracted for the first time in eight months as the impact of the ongoing war in the Middle East began to be felt more broadly across businesses.
The UK's gross domestic product fell 0.1% month over month in April 2026, following a 0.3% increase in March 2026, data from the Office for National Statistics showed Friday. The reading, which matched the market forecast, marks the first monthly fall in GDP since August 2025.
A 0.2% fall in services drove the decline in GDP, offsetting a 0.1% rise in construction, largely due to a negative contribution from administrative and support service activities and from arts, entertainment and recreation. The ONS said some of the declines "are likely to be attributed to the outbreak of conflict in the Middle East affecting UK-based businesses."
Meanwhile, production showed no growth in April, following a 0.2% fall in March.
"We expect this slowdown to intensify as higher energy costs feed through the economy, with the impact likely to be felt most accurately in the third quarter as the energy price cap rises," said Fergus Jimenez-England, associate economist at the National Institute of Economic and Social Research, following the data release. "That said, we expect the Bank of England to leave interest rates unchanged at next week's meeting."
On a yearly basis, the British economy grew 1.2% in April, against the prior 1.2% expansion and the consensus estimate of a 1.3% gain.
Separately, the country's goods and services trade deficit rose by 7.7 billion pounds sterling to 9.9 billion pounds in the three months to April, ONS data showed the same day. The goods deficit increased by 7.6 billion pounds to 62.5 billion pounds, while the services surplus declined by 200 million pounds to 52.6 billion pounds.
