Deutsche Bank raises 2026 UK growth outlook after Q2 GDP rose 0.4% q-o-q, defying energy shock headwinds.
The UK economy expanded 0.4% quarter-on-quarter in Q2 2026, following a 0.6% rise in Q1, making it the fastest-growing G7 economy this year. Annualized growth reached 2%, driven by robust household spending and business investment despite the Iran-related energy shock.
Earlier forecasts underestimated resilience, with household spending surging 0.85% in H1 2026. August PMI data further signaled strength, with the composite index climbing to 52.5 from 52.2, prompting upward revisions to 2026 GDP projections.
Deutsche Bank now sees potential for 2026 growth to exceed its 1.1% forecast, citing softer inflation and sustained economic momentum as key supports.