UK Economy Contracts 0.1% in April as Iran War Disrupts Services Sector
The UK economy registered a 0.1% contraction in April, according to the latest Office for National Statistics (ONS) figures. This marks the first monthly decline since August of last year, largely attributable to a slump in the services sector.
The ONS reported that several businesses cited the conflict with Iran as a factor impacting operational costs and turnover. While a slight contraction for April was anticipated by analysts, following stronger-than-expected growth in March due to consumers bringing forward spending, the war’s economic ramifications are now becoming evident.
Over the three months leading to April, the economy expanded by 0.7% compared to the preceding three-month period. However, April saw particular setbacks in services output, notably within arts and entertainment, sports activities, and amusement and recreation sectors.
The ONS specifically noted that “some of this fall can be attributed to the effects from the conflict with Iran, with the cancellation of multiple sporting events in the Middle East affecting the output of UK-based businesses.” Furthermore, manufacturing, wholesale, warehousing, and transportation support industries, along with accommodation and travel agencies, reported reduced turnover in April 2026 directly linked to the conflict.
Chancellor of the Exchequer Rachel Reeves acknowledged that the war “will have an impact at home.” She stated, “Before the conflict with Iran, growth was higher than expected and inflation was falling. The choices I have made as Chancellor mean our economy is in a stronger position to deal with the costs of the war.”
Yael Selfin, chief economist at KPMG UK, commented that the data “points to renewed fragility in the UK economy.” Selfin highlighted the continuing “impact of the energy shock” on consumer spending, anticipating a “significant increase in their energy bills from next month.” This, she suggested, would lead consumers to “cut back on purchases and increase their savings, which will weigh on economic activity.”
