british first quarter gdp grew 0.6% year on year, driven primarily by a 0.8% rise in the services sector. the services industry, encompassing travel, accommodation, retail, hospitality, real estate, finance and entertainment, saw notable contributions from wholesale and retail trade, vehicle repair and motorcycles (up 2%), information and communication (up 1.7%) and professional, scientific and technical activities (up 1.2%). in addition, output rose 0.2% and construction grew 0.4%.

march, the first full month after the iran war erupted, recorded a 0.3% expansion, exceeding market expectations of a contraction. services and overall output grew 0.3% and 1.5% respectively, while production fell 0.2%.

chancellor rachel reeves stated that these figures demonstrate the government has "the right economic plan" and warned that "a leadership contest risks plunging the country into chaos". her remarks come amid speculation that prime minister keir starmer could face a leadership challenge as early as today.

following the release of the office for national statistics (ons) data, shadow chancellor mel stride accused the "chaos surrounding the labour leadership" of "destabilising britain's economy".

economics editor faisal islam highlighted significant undervalued resilience in the economy, suggesting it could counter forecasts of the worst impacts from the iran war.

deputy economics editor dharshini david noted that the data reflects a robust start to the year, with households beginning 2026 on a brighter note, though analysts expect this trajectory to falter due to eroding confidence and rising cost pressures.

analysts such as Fergus Jimenez‑England from the national institute of economic and social research described the 0.6% quarterly growth as "relatively strong" but "largely reflecting old news". yael selfin, chief economist at kpmg, added that the "strong start" will likely fade as the war's effects permeate. luke barnes, deputy chief economist at aberdeen investments, remarked that "it is hard to see this mattering much to markets given how much has changed politically both internationally and domestically". suren thiru, chief economist for icaew, warned that prolonged political instability could "further dent confidence and increase financial market turbulence, likely resulting in markedly weaker spending and investment".

ons data is routinely revised as more information becomes available, making future revisions probable.

gdp measures the size and health of a country's economy by assessing production, spending and earnings over a period. it does not fully capture living standards or wealth distribution. generally, steady gdp growth signals increased spending, job creation and higher tax revenues. a recession is defined as two consecutive quarters of gdp decline, which can trigger wage freezes and layoffs.

the 0.6% growth represents the strongest quarterly performance since early 2024, the best per‑capita quarterly expansion in four years and the fastest among g7 members, with japan's projected quarterly growth estimated at 0.4%.

these figures suggest the uk economy has shown resilience despite war‑related cost pressures, yet analysts anticipate a slowdown over the summer as confidence wanes and higher fuel and living costs compress profits and incomes.

in the hospitality sector, businesses in liverpool report changing consumer behaviour, with tighter spending on discretionary activities. oliver clarke, managing director of baa bar group, noted "everyone is getting squeezed with higher bills, leading to more cautious spending". local venues are engaged in a "race to the bottom" with increasingly attractive promotions.

similarly, kennady mace, co‑owner of a play centre in chelmsford, described how rising costs force them to limit charges while maintaining viability, describing the current period as the most challenging in their 13‑year history.

the chancellor also linked the data to the need for stability, emphasizing that "now is not the time to risk economic stability" and that the government will continue to "build a stronger, more resilient economy for the future".

overall, the outlook remains one of cautious optimism tempered by political uncertainty and ongoing cost pressures, with markets and policymakers closely monitoring upcoming indicators and sentiment shifts.