Latest figures show better-than-expected GDP growth, with property market remaining resilient
The UK economy expanded by 0.3% in March, defying forecasts of a contraction, according to data published by the Office for National Statistics (ONS).
The result follows a revised 0.4% rise in February and flat growth in January, and compares favourably with economists' expectations of a 0.2% decline.
GDP grew by 0.6% in the three months to March, up from 0.5% in the three months to February and 0.4% in the three months to January 2026.
GDP grew 0.6% in Quarter 1 (Jan to Mar) 2026.
— Office for National Statistics (ONS) (@ONS) May 14, 2026
Services (+0.8%) construction (+0.4%) and production (+0.2%) all increased.
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"Growth picked up in the first quarter of the year, led by broad-based increases across the services sector," said Liz McKeown, director of economic statistics at the ONS. "Within that, wholesale, computer programming and advertising performed particularly well. Production also grew slightly, while construction returned to growth, though only partly reversing weakness at the end of last year."
The March reading represents one of the first official indicators that the Iran war — which began on the final day of February — has not disrupted business and consumer activity as severely as anticipated, despite elevated oil and gas prices following the closure of the Strait of Hormuz. The figures broadly align with business surveys suggesting the economy has retained momentum in spite of the ongoing conflict.
"A stronger-than-expected GDP performance reinforces the picture of a UK property market that has so far remained more resilient than many anticipated," said Colin Bradshaw (pictured right), chief executive of property data insights and analytics firm TwentyCi.
"Given the current global backdrop, including continued instability in the Middle East, many expected confidence across housing and mortgage markets to deteriorate more sharply. Instead, our data continues to show a market that is still growing compared with 2024, although momentum has moderated in recent weeks."
Nonetheless, risks remain. The Bank of England cautioned last month that higher interest rates may be necessary in the coming months, warning that "higher inflation is unavoidable" as a consequence of the Middle East conflict. Inflation rose to 3.3% in March from 3% in February, driven by the largest increase in fuel prices in over three years. Bank researchers also noted that the energy supply shock "could weigh on GDP growth" if income growth slows, business investment falls, and supply chains face disruption.
"Inflation risks are reducing expectations of imminent interest rate cuts, keeping affordability under pressure," Bradshaw said. "At the same time, households are absorbing higher fuel and energy costs, while buyer enquiries softened during March before showing more mixed trends in April. We are also starting to see activity cool slightly in London and the South East.
"However, the broader picture remains one of resilience. Buyers who are active in the market appear highly committed, and transaction volumes continue to hold up better than expected against a difficult economic backdrop. Our forecast remains 1.2 million transactions in 2026. While geopolitical risks remain elevated and conditions could shift quickly, the current evidence suggests the housing market is cooling gradually rather than entering a significant downturn."
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