British economy is tracking materially stronger than expected, says investment bank Proactive uses images sourced from Shutterstock
Britain’s economy is tracking materially stronger second-quarter growth than UBS expected after GDP returned to expansion in May, signalling limited fallout so far from the Middle East energy shock.
GDP rose 0.1% month on month, beating expectations for stagnation and reversing April’s 0.1% contraction. UBS calculated that output across April and May was consistent with quarterly growth of 0.4%, well above its current 0.1% forecast.
Services drove the rebound, expanding 0.3% as professional and scientific activities and administrative support recovered from April’s declines. Industrial production fell 0.5%, while construction output dropped 0.8% because of weaker repair and maintenance work.
“Today’s GDP release clearly implies an upside risk to our Q2 GDP forecast and, by extension, the 2026 annual average,” UBS economists said.
However, the bank retained its full-year forecasts of 1.0% growth in 2026 and 1.1% in 2027, warning that stronger first-half activity could be followed by weaker growth later in the year.
“We remain cautious about some payback in H2,” UBS said, noting that residual seasonal effects may have boosted recent first-half growth.
UBS AG is a Swiss-headquartered global financial services group providing wealth management, investment banking, asset management and banking services.