Deutsche Bank revises UK growth forecasts upward after stronger-than-expected household spending and business investment in the first half.
The UK economy expanded by 0.4% quarter-on-quarter in Q2, pushing annualized growth in the first half to 2%. Household spending, business investment, and stockpiling drove the uptick, outperforming expectations and positioning the UK at the top of the G7 growth table for a second consecutive quarter.
Forecasters are now revising 2026 growth projections upward to 1.1%, though a slowdown is anticipated in the second half. Rising energy costs, higher pump prices, and fiscal uncertainty under Prime Minister Burnham’s upcoming budget are expected to weigh on activity, with growth likely easing to 0.1% quarter-on-quarter.
Despite the strong start, risks to growth have tilted higher, with inflationary pressures and policy uncertainty clouding the outlook for later in the year.