Britain’s economy is expected to show signs of an impact from the Iran war when official figures are released for April, with forecasts for a sharp pullback after a surprisingly strong start to the year.
The figures on Friday from the Office for National Statistics (ONS) are set to show the beginnings of a squeeze on households after the conflict sent fuel prices surging.
Retail figures for April have already revealed sales fell at their fastest rate for almost a year, down 1.3% as soaring petrol and diesel prices hit fuel sales and demand for clothing waned.
It is thought that much of the reversal in sales is also down to households having stocked up on fuel in March as prices started rising at the pumps.
Motor fuel sales plunged by 10.2% in April – the largest fall since November 2020.
This is set to drag on the dominant service sector’s performance in April and leave overall gross domestic product far below the 0.3% growth previously recorded for March.
March’s out-turn helped drive growth of 0.6% overall in the first quarter of 2026, which was far better than expected.
But the strong growth is likely to start fading throughout the second quarter, according to experts.
Deutsche Bank chief UK economist Sanjay Raja said: “After a super strong start to the year, we expect the UK to see some course correction in the second quarter.
“Indeed, with the energy shock from the Iran conflict in full swing, household incomes will likely be squeezed.
“The cost of living and the cost of doing business will have likely increased, weighing on activity and investment.”
He said he is not expecting a “big drop-off in momentum just yet”, but is expecting GDP to edge down by around 0.1% month-on-month in April as the effects take hold.
Mr Raja added: “We continue to think activity will remain subdued as the energy shock catches up with households and businesses, while domestic political uncertainty likely ramps up over the summer.”
Pantheon Macroeconomics experts are more pessimistic, forecasting a 0.2% monthly decline in GDP in April, while Investec Economics is expecting the economy to remain flat.
Investec economist Ellie Henderson said: “Despite challenging global economic conditions, the UK economy managed to expand by 0.3% on the month in March, surpassing expectations.
“Although the growth in output was fairly broad-based, some of the strength could be attributed to consumers and firms bringing forward certain purchases in anticipation of subsequent price rises as the shock of higher energy prices filter through.
“This frontloading might have also lifted output in some areas in April, but ultimately its effect will be temporary and will lead to weaker numbers thereafter as inventories are then run down.”
She added: “We anticipate some weakness in broader discretionary spend in April, which is likely to have impacted spending on food services, accommodation and arts.”
