UK GDP growth lower than expected, German retail sales higher than expected

The UK's economy grew by 0.9% year-over-year in the latest reading, missing both the previous figure and market expectations of 1.1%, while quarterly GDP growth remained unchanged at 0.6%, matching forecasts. In Germany, retail sales surprised to the upside, rising 1.1% month-over-month and 1.8% year-over-year, comfortably beating expectations, while import prices increased 0.7% from the previous month, the current account surplus narrowed to €22.1 billion, and business investment grew 0.9% quarter-over-quarter, in line with forecasts.

UK GDP data — key info

• UK real GDP increased by 0.6% quarter-on-quarter in Q1 2026, confirming the earlier estimate and marking a clear acceleration from the revised 0.1% growth recorded in Q4 2025. The expansion was broad-based, with all three main sectors contributing positively. Services were the main growth engine, rising by 0.8%, which suggests that domestic activity remained resilient at the start of the year.
• Annual GDP growth for 2025 was revised slightly lower to 1.3% from 1.4%, following 1.0% growth in 2024. The revisions were relatively small and mainly reflected updated source data and seasonal adjustment changes.
• Real GDP per head rose by 0.6% in Q1 and was 0.7% higher than a year earlier, pointing to a modest improvement in economic output per person.
• The household picture was less positive. Real household disposable income per head fell by 0.8% in Q1, reversing part of the 1.2% increase seen in Q4 2025, and the household saving ratio also declined, falling by 0.7 percentage points to 8.9%, mainly because of a weaker contribution from non-pension saving.
• Overall, the data show that the UK economy started 2026 on a stronger footing, supported mainly by services. However, weaker household income and lower savings suggest that consumers may remain under pressure despite better headline GDP growth.

EURGBP chart (D1)

Source: xStation5

Source: ons.gov.uk

Source: ons.gov.uk