Official figures show the UK GDP Iran war impact was cushioned in June by record-breaking heat and the start of the football World Cup, with the economy growing 0.3% in the month against expectations of no growth at all. The data, published by the Office for National Statistics (ONS), puts quarterly growth for April to June at 0.4%, down from 0.6% in the first three months of 2026.
GDP, or gross domestic product, is the broadest measure of how much an economy produces. A figure of 0.4% for the quarter means the UK made modest but real progress, even as pressure from the Middle East conflict weighed on businesses and households.
What drove growth in June
The ONS said firms across the services sector reported buoyant trade in June, with some crediting the prolonged hot weather and the arrival of the World Cup football tournament. Food and drink businesses were among those to benefit after the tournament began on 11 June, while television and advertising also picked up. Hotels, boots retailers, and those in the amusement and recreation sector all got a lift from the heat. The heatwave saw three consecutive days of record-breaking June temperatures peaking above 37C.
Not everyone gained. Construction firms reported a hit from the extreme conditions, and many schools were closed because of the heat. The ONS said the services sector grew by 0.4% in June, but this was partly offset by falls of 0.2% in production and 0.1% in construction.
The June result followed flat growth in May, which was revised down from a previously estimated 0.1% rise, and a 0.1% contraction in April. Liz McKeown, ONS director of economic statistics, said: ‘Growth slowed in the second quarter of the year, following a strong start to 2026, but remained relatively robust.’ She added: ‘Services also drove growth in June, with some businesses reporting that good weather and sporting events may have had a positive impact that month.’
UK GDP Iran war impact: the Treasury’s worst-case scenario
Behind the relatively upbeat monthly figures, the government is working through some sobering projections. BBC News reported that Prime Minister Andy Burnham and Chancellor John Healey were presented with a reasonable worst-case scenario in which the Strait of Hormuz remains effectively closed for the next five months, with no permanent US-Iran peace deal until the new year.
Under that scenario, Treasury modelling puts full-year UK GDP growth for 2026 at 0.9%, slightly below the 1.1% forecast made by the Office for Budget Responsibility (OBR) in March. The OBR is the independent body that scrutinises the government’s economic figures. If disruption continues into 2027, Treasury experts have briefed the Prime Minister to expect growth as low as 0.3% that year.
The inflation picture under the same scenario is also uncomfortable. Treasury modelling suggests inflation would peak at 4.3% in the first three months of next year, adding to cost-of-living pressure at a time when many households are already stretched.
The Strait of Hormuz is the narrow waterway between Iran and Oman through which a large share of the world’s oil and gas travels. Disruption there pushes up energy costs globally, and the UK feels that through higher fuel and heating bills, as well as increased costs for businesses that rely on imported goods.
Chancellor John Healey acknowledged the pressures in response to the latest GDP data, saying: ‘I know people are worried about the impact of the conflict in the Middle East on their cost of living, which has been too high for too long and it has added pressure on British businesses.’ He added: ‘This is an active, hands-on Government, putting British interests first, giving breathing space to those feeling the strain, making our country more resilient and bringing hope back.’
The England team reached the semi-finals of the World Cup in July, which is expected to have continued to support some sectors. The fuller picture of how the summer played out for the economy will become clearer when the ONS releases its next set of monthly GDP figures. HM Treasury has said it is monitoring the situation in the Middle East closely and will set out further detail on its economic response in due course.
