United Kingdom: GDP momentum seen slowing – Deutsche Bank

Deutsche Bank Research, led by Chief UK Economist Sanjay Raja and economist Maui Brennan, nowcasts UK GDP flat in August 2026 after a strong July. They expect services to rise slightly, with declines in production and construction. The team sees GDP momentum stepping down over coming months as energy-driven price pressures, tighter financial conditions and Budget uncertainty weigh on households and businesses.

Growth resilience facing energy shock

"After July GDP surprised to the upside, expanding by 0.4% m-o-m, we expect a little bit of a catch-down in August, with GDP coming in flat on the month (0% m-o-m). Indeed, much of the strength in July GDP came from more volatile industries in the national accounts – something, we think, will reverse in August."

"Our models point to a flat GDP print for August. But there are downside risks brewing, given growing macroeconomic uncertainty. The UK’s story of resilience, however, shouldn’t be understated."

"We expect quarterly GDP to stay strong for Q3-26, running at 0.5% q-o-q, before slowing dramatically to 0.1% q-o-q. We expect 2026 GDP to run closer to 1.4%m before edging higher through the next two years."

"Where to next? We expect GDP momentum to take a step down over the coming months. The one-off push in household incomes over Q2-26, due to an increase in net social benefits, will wane against still rising price pressures – particularly from energy."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)