Reported by Consejeros Editorial Team
The new political crisis surrounding the embattled British Prime Minister, Starmer, has turned the spotlight on the UK. Just today, the country’s Q1 2026 GDP figures were released, delivering a positive surprise with the economy growing by 1.1% year-on-year, compared to the 0.8% expected by the consensus of analysts and the 1.0% recorded in Q4 2025. On a quarter-on-quarter basis, growth met expectations of 0.6%, compared with the previous 0.2% (revised from 0.1%). By component, consumption rose by 0.9%, public spending by 1.4%, investment by 0.5% and the external sector by 1.8%.
Luke Bartholomew, deputy chief economist at Aberdeen Investments, acknowledges that GDP growth has been fairly “robust” during the first quarter, but also that “it is difficult to see this having much relevance for the markets, given how much things have changed in this period, both in international and domestic politics”.
“Rising energy prices will weigh on growth, holding back any recovery that might otherwise have taken place. Furthermore, the current political uncertainty is likely to affect investment, given the possibility of a significant shift in fiscal policy. Therefore, the risk of a recession later this year is high, but, for now, it is likely that the main driver of the government bond market will be political events, rather than economic data”.
For Bankinter’s analysis team, the acceleration in services (80% of GDP) explains the improvement in UK GDP, although they note that “productivity has remained stagnant since Brexit and the political turmoil caused by constant changes of government (four Prime Ministers in the last four years) is weighing on consumer confidence and investment”. Furthermore, employment is deteriorating, wages are slowing and interest rates remain high. Taking all this into account, they estimate growth of around 1% for 2026.
