UK GDP: Some Grounds for Cautious Optimism

Today’s GDP data for the UK, released by the ONS, suggests the economy may not be in as poor a condition as many assumed. Monthly GDP rose 0.3% in March, and the economy grew 0.6% over the first three months of the year. If that three‑month pace were repeated from April through December, most people would consider that a very solid outcome. Since the Global Financial Crisis, and the long period of distortion created by ultra‑low interest rates, the UK has managed annual growth above 2.4% only three times — and one of those was the post‑pandemic rebound.

The March 2026 growth figure is stronger than the 0.2% recorded a year ago, while year‑to‑date growth is slightly weaker than the 0.7% seen in Jan–Mar 2025. Services output is 0.1% lower than a year earlier, whereas construction, at 1.5%, is 1.0% higher. Although production is still contracting, down 0.2% in March, the pace of decline is slower than it was a year ago.

The data from this time a year ago was before the Chancellor’s budget impacts had hit the data, these increased taxation, fuelled inflation and created adverse effects on employment levels, so there may be more cause for optimism for the economy in the next 9 months than there was a year ago. That said, the current uncertainty within the government won’t help the markets and business to have the confidence they need to invest and grow. At the time of writing 10-year Gilts were unchanged so far today but the political turmoil means that UK’s borrowing costs are up 0.04% on where they were a week ago and 0.25% higher than they were a month ago, we are still waiting to see if there will be a challenge to the Prime Minister’s leadership, but to maintain growth we need stability and predictability, something that the chaos of a leadership challenge will never provide.