The UK economy experienced a faster pace of growth in the first quarter of this year, but its resilience is set to face a severe test as the ongoing conflict in the Middle East continues to exert pressure.

Over the past two decades, the UK economy has struggled to build sustained growth momentum. Recently, it has faced headwinds from the COVID-19 pandemic and Russia's full-scale invasion of Ukraine, while the persistent drag on business investment from Brexit remains a factor.

Data released by the UK Office for National Statistics on Thursday showed that gross domestic product grew by 0.6% quarter-on-quarter from January to March, up from a 0.2% expansion in the fourth quarter of 2025. This figure matched the consensus forecast of economists in institutional surveys and marked the fastest growth rate since the first quarter of 2024.

In the first three months of the year, the UK's economic performance outpaced that of the United States and most European economies: the UK's annualized growth rate reached 2.6%, compared to 2.0% for the US. Even after the initial US and Israeli airstrikes on Iran, the UK's GDP still managed to grow by 0.3% in March alone.

A deputy economist at the National Institute of Economic and Social Research stated in a client research note: "Although the growth outlook remains fragile, the initial impact of the energy price shock on UK economic growth has been relatively limited."

However, continued disruptions to shipping in the Strait of Hormuz and a sharp surge in energy prices could deliver a fresh blow to the economy just as signs of recovery are beginning to emerge.

In April, the International Monetary Fund downgraded its 2026 growth forecast for the UK from 1.3% to 0.8%, the largest downward revision among major developed economies. The reasons cited include the UK's high dependence on natural gas imports and market expectations that the Bank of England may implement fewer interest rate cuts than previously anticipated.

As an energy-importing nation, the UK is highly vulnerable to spikes in global energy prices. In March, UK fuel inflation surged to its highest level since January 2023, a period when markets were still digesting the aftermath of the war in Ukraine.

The UK Chief Economist at KPMG stated: "The negative economic impact of the turmoil in Iran is likely to materialize in the second quarter. As rising costs and weakening demand continue to weigh on economic activity, we expect UK economic growth to slow."

Yet, the magnitude of the impact from this geopolitical unrest on both growth and inflation remains uncertain. In its latest monetary policy meeting in April, the Bank of England outlined three different economic scenarios, emphasizing that the future trajectory will depend on the scale and duration of the energy price shock triggered by the conflict. Currently, investors are pricing in expectations for one or two interest rate hikes by the UK this year, with some market participants anticipating the first hike could come as early as the next policy meeting in June.

Some observers also question whether the growth momentum seen in early 2026 will follow a pattern similar to recent years, where economic growth typically slowed during the autumn and winter seasons.

The UK Office for National Statistics noted that economic seasonal patterns have changed significantly since the pandemic, and it has accordingly adjusted its model for measuring seasonal factors.