The UK economy's growth for the second quarter of 2026 has been revised to 0.5%, up from an earlier estimate of 0.4%, according to the latest National Accounts. This adjustment is a positive development for Chancellor John Healey as he prepares the budget due in four weeks. The upgraded figure indicates that his predecessor, Rachel Reeves, oversaw a slightly larger economy than previously acknowledged. The growth was primarily driven by the services sector, which saw a 0.6% increase, and the construction sector, which grew by 0.8%, although the production sector reported a 0.1% decline.
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Liz McKeown, director of economic statistics at the Office for National Statistics, stated that the latest figures reflect annual improvements in economic measurement. Despite the upward revision for the current quarter, the growth estimate for 2025 was revised downwards, though stronger growth in services in the latest quarter has resulted in the economy being slightly larger than previously estimated.
In other developments, diesel prices in the UK are approaching £2 a litre for the first time, with the average price now standing at 199.72p. The motoring body RAC noted that while many forecourts already charge above £2, the average price has not crossed that threshold yet. The increase in diesel prices is largely attributed to the ongoing disruptions in global oil supply stemming from the Iran war and Ukrainian attacks on Russian oil facilities.
In the United States, economic growth for the second quarter has also been revised upward to an annualized rate of 2.2%, up from 1.5%. Improvements in investment, consumer spending, and government spending contributed to this revision. Growth across various states varied, with New York recording a 4.0% increase in GDP, while West Virginia experienced a 2.3% decrease. Wall Street reacted positively to the revised figures, with early trading showing slight gains in major indices.
The US also saw a stronger-than-expected increase in private sector employment, adding 90,000 jobs in September, according to the ADP National Employment Report, marking a notable recovery in job creation after a prior slow period. The inflation rate in August was lower than anticipated, with personal consumption expenditures rising by only 0.3%, suggesting a potential easing in pressure for interest rate hikes by the Federal Reserve in upcoming meetings.
Concerns regarding financial stability have been highlighted by the Bank of England amid rising debt from AI companies and the impact of global conflicts on economic conditions. The Bank's Financial Policy Committee noted that vulnerabilities in the financial system have increased, particularly due to interconnected global risks.
In European news, inflation in Germany has risen to 3.3%, while France recorded a similar increase in its consumer prices, driven by higher energy costs. The UK remains a focal point for economic recovery, with Allianz Trade recently upgrading its growth forecast for the year to 1.3%, noting resilience in consumer spending and business investment despite challenges.