Economy
Jun 12, 2026
UK Economy Shrinks 0.1% in April as Iran War Dampens Growth
The UK’s gross domestic product fell 0.1% in April, the first monthly contraction after a 0.3% rise…
Iran‑Induced Energy Shock Drives April GDP Decline
The Office for National Statistics reported that the UK’s gross domestic product fell 0.1% in April, marking the first monthly contraction since early 2024. The slowdown follows a 0.3% rise in March and is tied to rising energy costs after Iran closed the Strait of Hormuz.
GDP Figures: 0.1% Contraction After 0.3% March Gain
April 2026: -0.1% month‑on‑month GDP change
March 2026: +0.3% month‑on‑month GDP change
Energy price index rose by approximately 5% in April (estimate)
Why the Conflict Is Dampening UK Growth
Iran’s closure of the Strait of Hormuz disrupted global oil shipments, pushing international energy prices higher.
Higher energy costs reduced consumer spending and increased production costs for UK manufacturers.
The chancellor Rachel Reeves warned that the economy could slip into contraction in Q2.
Market sentiment turned cautious, with the pound weakening against the dollar.
What Comes Next: Q2 Outlook and Policy Options
Analysts expect a further GDP decline of 0.2%‑0.4% in the second quarter if energy prices stay elevated.
The Treasury may consider targeted fiscal relief for energy‑intensive sectors.
Monetary policy could remain tight to curb inflation stemming from higher import costs.
Monitoring of geopolitical developments around the Strait of Hormuz will be critical.
#United Kingdom
#Iran
#Rachel Reeves
Read More