UK GDP falls 0.1% in April amid Middle East tensions

The UK economy contracted by 0.1% in April, marking its first monthly decline since August 2025, as rising costs and growing uncertainty linked to the conflict in the Middle East began to affect business activity.

Figures published by the UK’s national statistics agency, the Office for National Statistics, showed gross domestic product (GDP) fell by 0.1% during the month, following growth of 0.3% in March and 0.4% in February.

The decline was driven by a 0.2% fall in services output, while construction activity rose by 0.1% and production output was flat overall. Manufacturing output increased by 0.4% during the month.

Despite the monthly setback, the broader picture remained more positive. GDP grew by 0.7% in the three months to April compared with the previous three-month period, accelerating from growth of 0.6% in the three months to March.

Services output increased by 0.8% over the three-month period, while construction output rose 1.6%, continuing its recovery after a prolonged period of weakness. Production output, however, declined by 0.1%.

The ONS said services activity was particularly affected by a 4.3% decline in arts, entertainment and recreation, with sports-related activity falling 9.1% after a number of events in the Middle East were cancelled following the outbreak of conflict in Iran.

The figures add to growing evidence that geopolitical tensions are beginning to affect the UK economy. The conflict has disrupted global energy markets, driving higher oil prices and contributing to rising fuel costs for businesses and consumers.

Responding to the data, Chancellor Rachel Reeves said the conflict “will have an impact at home”.

“Before the conflict in the Middle East, growth was higher than expected and inflation was falling,” she said. “The choices I have made as Chancellor mean our economy is in a stronger position to deal with the costs of the war.”

Industry leaders warned that the latest figures highlight the challenges facing businesses as economic uncertainty persists.

Mike Randall, CEO of Simply Asset Finance, said: “GDP slipping into negative territory suggests economic headwinds have begun to bite.

“A closer look at sectors like construction suggests we still haven’t created the conditions businesses need to turn confidence into investment.

“A combination of more expensive borrowing, rising input prices and ongoing planning and regulatory hurdles are putting projects on hold and keeping investment decisions in limbo – something that risks holding back growth down the line.

“If the government wants to build lasting momentum, it must focus on removing the barriers holding these businesses back. Britain’s builders are ready to get shovels in the ground, but need the confidence and access to finance to get moving.”

Neil Rudge, Chief Banking Officer at Shawbrook, said the figures demonstrate how global events are increasingly feeding through into the domestic economy.

“Today’s figures show that the geopolitical climate is beginning to feed through into the domestic economy, with GDP falling by 0.1% in April following the surprising growth we saw last month,” he said.

“Rising oil and gas prices, combined with ongoing supply chain disruption, are creating real headaches for businesses, particularly those with a heavier reliance on international trade.

“With uncertainty showing no signs of easing, the businesses best placed to weather this will be those that take a hard look at their costs and plan ahead. External funding has a real part to play here, giving SMEs the flexibility to manage pressures and keep pushing forward with their growth plans even in tougher times.”