European Economics Analyst

Latest edition · October 9, 2026

European Economics Analyst UK—Will Growth Resilience Continue

UK GDP growth has defied expectations in 2026, led by consumer resilience, robust business investment in tech and utilities, and resilient global demand. Although growth is projected to slow to 0.2% in Q4 and 0.3% in Q1 2027 as higher energy bills and mortgage rates bite, it should recover later in 2027 to 1.5% Q4/Q4.

UK economic growth accelerated in 2026 with GDP rising 0.6% in Q1 and 0.5% in Q2, with tracking models pointing to 0.5% in Q3. Resilience has been underpinned by solid consumer spending, rising capex in utilities and ICT, and resilient global growth. However, Goldman Sachs expects growth to decelerate over the winter to 0.2% qoq in Q4 2026 and 0.3% in Q1 2027 as energy prices and mortgage rate rises take their toll. Growth is forecast to re-accelerate later in 2027 toward a 1.5% Q4/Q4 pace as wholesale gas prices decline and Bank of England monetary tightening undershoots market expectations.

Key takeaways from the latest edition

• 1.UK GDP growth proved unexpectedly strong in 2026, driven by resilient consumer spending, strong utilities and ICT business investment, and firmer global demand.
• 2.Growth is expected to slow near-term to 0.2% qoq in Q4 2026 and 0.3% in Q1 2027 due to winter energy bills, mortgage rate passthrough, and fading temporary summer boosts.
• 3.Activity is projected to recover later in 2027 toward trend, underpinned by falling gas prices, fewer BoE rate hikes than priced by markets, and persistent digital/utilities investment.

What this series covers

• What is Driving the Firmer Growth Figures?
• A Softer Near-Term Outlook
• A Growth Recovery Later in 2027 if Energy Price Pressures Ease
• How Could the Budget Impact the Growth Outlook?
• We Expect 1.9% Q4/Q4 Growth in 2026, Slowing to 1.5% in 2027

Edition archive

• European Economics Analyst UK—Will Growth Resilience Continue

  October 9, 2026

• European Economics Analyst Spillovers from the Global AI Capex Cycle

  October 5, 2026

• European Economics Analyst ECB—Potential Implications of Rising Sovereign Stress

  October 4, 2026

• European Economics Analyst UK—Soft Labour Market Should Limit Extent of BoE Tightening but Unlikely to Stop a November Hike

  September 28, 2026

• European Economics Analyst Euro Area—Introducing Our Nearcast Model for Inflation

  September 19, 2026

• European Economics Analyst Modelling Norway

  September 10, 2026