Reeves Says 0.1% April Drop Hits Uk Gdp

uk gdp contracted 0.1% in April 2026 as businesses reported higher costs and weaker turnover linked to the Iran war. The drop was the first monthly fall since August 2025, a sign that the conflict is already feeding into activity, even before higher energy bills arrive in July 2026.

The Office for National Statistics said some firms cited the conflict in the Middle East as having raised costs and affected turnover. For households and investors, that means the shock is not just about oil markets: it is now showing up in the spending plans and margins of UK businesses.

ONS Sees 0.7% Three-Month Growth

0.7% was the increase in output in the three months to April 2026 compared with the previous three-month period, according to the Office for National Statistics. That keeps the quarterly picture positive even after April’s monthly setback, and it helps explain why economists had already forecast the contraction after stronger than expected growth in March 2026.

0.1% is a small monthly move, but Yael Selfin said the April figure is the more important signal for the months ahead, saying “the contraction in April is more indicative of growth prospects for the economy going forward” and that it “points to renewed fragility in the UK economy, with pressure on both consumers and businesses likely to persist over the coming months”.

Brent Crude Nears $86

$120 was where Brent crude has risen as high as since the conflict began, after the Iran war led to the effective closure of the Strait of Hormuz, a key shipping route for oil tankers. On Friday, Brent crude sank to a three-month low of $86, but the earlier jump has already pushed up UK petrol and diesel prices and set up higher household energy bills when the cap rises in July 2026.

“have signalled their intention to cut back on purchases and increase their savings, which will weigh on economic activity” is how Selfin described the consumer response to those higher bills, while she also said “subdued domestic demand is limiting firms' ability to pass these higher costs on to consumers, which is likely to squeeze profit margins”. That leaves businesses caught between rising input costs and customers who are already pulling back.

Reeves and Stride Split

Rachel Reeves said the war “will have an impact at home”, adding: “Before the conflict in the Middle East, growth was higher than expected and inflation was falling,” and “The choices I have made as Chancellor mean our economy is in a stronger position to deal with the costs of the war.”

Mel Stride took the opposite line, saying “putting Benefits Street first leaves the economy weaker” and that only the Conservatives “have a plan to get Britain working again.” With analysts expecting the Bank of England to keep interest rates unchanged when it meets next week, the immediate pressure point is whether weaker turnover and higher energy costs continue to feed through to summer activity.