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UK GDP growth seen slowing in 2H26 as temporary supports fade
Societe Generale expects UK GDP to average 0.1% quarter over quarter in the second half of 2026, taking full-year 2026 growth to 1.1%.
Societe Generale economist Sam Cartwright expects the UK economy to slow after a firmer start to 2026, pointing to fading temporary growth supports and rising headwinds in the second half. The firm cited UK GDP rising 0.4% quarter over quarter in 2Q26, supported mainly by business investment and resilient consumer spending.
Cartwright said ICT equipment investment, potentially linked to AI, has been a key contributor since 4Q24 and is expected to keep supporting growth near term. Even so, the outlook calls for softer GDP momentum in 2H26, with temporary factors from 2Q26 likely to fade and energy related pressures expected to intensify.
In its view, the pattern of stronger growth in the first half followed by weaker growth in the second half is likely to repeat, driven by factors including uncertainty tied to the US Iran conflict, firms taking a wait and see approach ahead of an Autumn Budget, restrictive monetary policy, and higher utility prices weighing on real incomes.
Societe Generale forecast UK GDP growth to average 0.1% quarter over quarter in 2H26, aligning with the Bank of England’s July Monetary Policy Report forecast, and leaving 2026 growth at 1.1%. The key risk, the firm said, remains the trajectory of the US Iran conflict, though it noted UK activity data has so far stayed resilient to the crisis.