The UK economy contracted by 0.1% in April, marking its first monthly decline since August 2025, according to the latest figures from the Office for National Statistics (ONS).
The fall followed stronger-than-expected growth in March and was broadly anticipated by economists. However, some businesses reported that the conflict in the Middle East had increased costs and disrupted trading conditions.
The outbreak of war involving Iran led to the effective closure of the Strait of Hormuz, a vital route for global oil shipments. As oil prices rose sharply, UK motorists faced higher petrol and diesel costs, while households are expected to see energy bills increase further when the energy price cap rises in July.
The impact extended beyond fuel and energy. Higher oil prices have pushed up costs across a wide range of goods and services, placing additional pressure on businesses and consumers.
Despite the monthly decline, the broader picture remains more positive. The economy grew by 0.7% in the three months to April compared with the previous three-month period, a measure often viewed as a more reliable indicator of underlying performance.
The ONS said the main driver of April’s contraction was a 0.2% fall in the services sector, which accounts for around three-quarters of UK economic output. Arts, entertainment, sport and recreation businesses were among the hardest hit. Some UK firms were also affected by the cancellation of sporting events in the Middle East.
Manufacturing, transport and travel businesses also reported disruption linked to the conflict.
With economic growth showing signs of slowing and inflationary pressures expected to rise, analysts widely expect the Bank of England to leave interest rates unchanged when policymakers meet next week.
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