Societe Generale forecasts weaker UK economic expansion in 2H26 as temporary boosts fade and energy costs rise.
United Kingdom GDP grew 0.4% quarter-on-quarter in 2Q26, supported by business investment and consumer spending. ICT equipment investment, tied to AI, contributed 0.45 percentage points to the 1.9% total GDP increase since 4Q24 and may continue near-term support.
Historically, strong first-half growth has been followed by weaker second-half performance. With fading one-off factors like the World Cup, restrictive monetary policy, and rising utility prices, growth is expected to decelerate. The Bank of England’s July forecast aligns with a 0.1% qoq average for 2H26.
Annual 2026 GDP growth is projected at 1.1%, above the 0.7% forecast at the end of 2025. Risks include unresolved US-Iran tensions and potential tax increases in the Autumn Budget.