Financial News: U.K. Economy Shrinks For First Time Since August

U.K. Economy Shrinks For First Time Since August

(RTTNews) - The U.K. economy contracted for the first time since August last year as the U.S.-Iran war has started to take its toll on business activity, official data showed Friday.

Real gross domestic product decreased 0.1 percent in April, in contrast to a 0.3 percent expansion in March, the Office for National Statistics reported. This was the first monthly fall since August 2025.

The decline was in line with economists' expectations and was driven by a 0.2 percent fall in services output. This was offset by a 0.1 percent increase in construction.

At the same time, industrial production showed no growth after falling 0.2 percent in March. Within industrial output, manufacturing output climbed 0.4 percent but came in slower than the 1.2 percent rise seen in March.

In the three months to April, real GDP advanced 0.7 percent, faster than the 0.6 percent increase in the three months to March. This was the fifth consecutive three-month on three-month growth.

"With the economic fallout from the Middle East conflict now feeding through to the economy, this pace of growth is unlikely to be sustained," the Confederation of British Industry economist Ben Jones said.

Jones observed that the U.K.'s growth prospects will depend increasingly on the strength of its domestic fundamentals.

British Chambers of Commerce Research Manager Stuart Morrison said the GDP fall of 0.1 percent for April may be the first sign of the impacts of the Iran conflict.

In April, the International Monetary Fund said the war and a slower pace of monetary easing mean the U.K. economy will grow only 0.8 percent this year and 1.3 percent next year.

The IMF said the net energy-importing economies such as the euro area and the U.K. will face large negative effects from the Iran war. Another report from the ONS showed that the visible trade deficit narrowed in April as exports increased amid falling imports. The visible trade gap fell to GBP 26.05 billion in April from GBP 27.22 billion in March.

Exports logged faster monthly growth of 2.4 percent, while imports dropped 0.7 percent.

The total trade balance that combines goods and services trade, registered a deficit of GBP 8.4 billion compared to a shortfall of GBP 9.7 billion in March.

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