UK economy grows 0.6 per cent in Q1, tops G7 growth table despite living standards squeeze

Britain's economy expanded by 0.6 per cent in the first quarter of 2026, matching expectations and making it the fastest-growing economy among the Group of Seven (G7) nations during the January-March period, according to official data released on Tuesday.

Figures from the UK's Office for National Statistics (ONS) shows that gross domestic product (GDP) grew by 0.6 per cent from the previous quarter, unchanged from the provisional estimate published last month.

The stronger quarterly performance marked an acceleration from the 0.2 per cent growth recorded in the final quarter of 2025 and was driven primarily by the services sector, alongside modest gains in production and a recovery in construction activity.

According to the ONS, services output rose 0.8 per cent during the quarter, while production increased 0.2 per cent. Construction output also returned to growth, rising 0.4 per cent after contracting in the previous quarter.

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The latest figures put the UK at the top of the G7 growth rankings for the first quarter, narrowly ahead of the United States and Japan, both of which recorded quarterly growth of 0.5 per cent. Germany and Italy each expanded by 0.3 per cent, Canada's economy was flat, while France contracted 0.1 per cent, raising concerns about a potential technical recession.

The ONS also said real GDP per capita increased by 0.6 per cent during the quarter and was up 0.9 per cent from a year earlier, indicating that economic output per person improved after a subdued performance in recent quarters.

However, other indicators painted a more mixed picture of the economy.

Separate ONS data showed that real household disposable income per head — a key measure of living standards — fell by 0.8 per cent in the first quarter, suggesting that households had less money available to spend despite stronger overall economic growth.

The statistics agency said higher taxes on income and wealth, together with lower net social contributions, more than offset gains from wages and property income, leaving households financially worse off.

The data underscore the challenge facing the UK government as it seeks to translate stronger headline growth into improved living standards for households.

There are also early signs that the momentum seen in the first quarter may be fading. ONS data released earlier this month showed the economy contracted by 0.1 per cent in April, suggesting businesses and consumers may be facing fresh headwinds at the start of the second quarter.