United Kingdom: Growth pace cools after hot start – Deutsche Bank

Deutsche Bank economists Sanjay Raja and Maui Brennan expect United Kingdom (UK) Gross Domestic Product (GDP) to have slipped slightly in July after strong growth earlier in 2026. They forecast a modest monthly contraction led by services and production, with construction only marginally higher. The bank still projects UK GDP to expand by 1.1% in 2026 and 1.3% in 2027, with momentum supported by productivity and AI-related investment.

UK growth eases but stays resilient

"UK GDP likely dropped a touch in July after a hot start to the year. This isn’t the start of a protracted fall in activity, however. Recent survey data have remained positive."

"Economic momentum remains steady. Instead, we believe the July drop reflects a small course correction for an economy running at an unsustainable 2% annualised pace of growth."

"What do we expect? We expect a small 0.1% m-o-m contraction in July, led by falls in services (-0.1% m-o-m) and production (-0.3% m-o-m)."

"Looking ahead, we expect momentum to remain range-bound. Some catch down from the energy shock still feels likely."

"We continue to see GDP expanding by 1.1% this year, followed by 1.3% next year. Signs of further momentum coming from higher productivity and delivery of AI investment, we think can keep GDP rising further and faster in the coming years."