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ONS Confirms 0.4% Q2 Growth as Treasury Warns Worst‑Case 2027 Slump to 0.3%

The June bounce was driven by services and one‑off factors, and Treasury modelling says continued Gulf disruption could slow growth and lift inflation, tightening choices for the new government.

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Skyscrapers of the Canary Wharf commercial district are seen with The Shard building and construction cranes reflected in a perimeter glass wall of the viewing area of Garden at 120, in the City of London financial district, in London, Britain, September 23, 2025. REUTERS/Toby Melville
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Overview

  • The Office for National Statistics confirmed on Thursday that UK GDP rose 0.4% in the second quarter of 2026 and that output jumped 0.3% in June, with services posting the main gains.
  • The ONS said firms cited the FIFA World Cup and unusually hot weather as temporary boosts to hospitality, advertising and leisure activity that helped produce June’s surprise rise.
  • Internal Treasury scenarios shown to Prime Minister Andy Burnham and Chancellor John Healey project a more extreme outcome in which GDP growth could fall to about 0.3% in 2027 and CPI inflation could peak near 4.3% if disruption of the Strait of Hormuz persists.
  • Underlying activity is fragile because production was broadly unchanged and construction remains weak, so officials and forecasters warn the recent uplift is not a durable recovery.
  • The Treasury’s modelling, Bank of England cautions and higher energy costs mean the government faces constrained fiscal choices ahead of the October Budget and a likely energy price‑cap review that will affect household bills and business costs.