Britain’s economy grew faster than initially estimated in the second quarter, offering a modest improvement in the outlook while underscoring the uneven nature of the recovery.

Gross domestic product increased by 0.5% between April and June 2026, the Office for National Statistics said on Wednesday, revising up its previous estimate of 0.4%. The result makes the figures the most significant UK business and finance development of the day.

Services lead the expansion

The revised growth was driven primarily by the services sector, which expanded by 0.6% during the quarter. Construction also grew, increasing by 0.8%, while production contracted by 0.1%.

The figures suggest that activity held up despite disruption linked to the conflict in Iran, although the headline improvement does not represent a broad-based recovery across the economy.

The ONS also revised down its estimate of UK growth during 2025, tempering the significance of the stronger second-quarter performance. The data therefore presents a mixed picture for businesses and policymakers: current momentum was slightly better than previously thought, but the economy entered the period from a weaker base.

Household finances improve

Real household disposable income per head rose by 1.0% in the second quarter, following a 0.8% decline in the first three months of the year. The measure adjusts for inflation and reflects the money households have available after taxes and other deductions to spend, save or invest.

The household saving ratio also increased to 8.8%, up 0.2 percentage points from the previous quarter. The rise was attributed to increased non-pension saving, indicating that households retained more of their income rather than directing it immediately towards consumption.

Recovery remains uneven

The data will provide some reassurance to the government and companies exposed to domestic demand, but the sectoral breakdown highlights continuing weaknesses. Production declined during the quarter, while separate business conditions reporting has pointed to subdued consumer spending and pressure in construction and property.

For the Bank of England, the figures add to a complicated policy backdrop. Stronger-than-expected output and rising household income could reduce pressure for immediate support, while weaker production and cautious household behaviour point to lingering risks to growth.

The revised national accounts will also influence assessments of the government’s fiscal position ahead of the autumn Budget. A larger economy in the latest quarter can improve the apparent scale of economic activity, but the downward revision to 2025 growth underlines the limits of relying on one stronger quarter.