UK economy contracted 0.1% in April as the Iran war weighed on output
The UK economy contracted by 0.1% in April , the first monthly fall since August 2025, after growth of 0.3% in March. The decline was driven by a 0.2% drop in services output, while production was flat and construction edged up 0.1%.
The Office for National Statistics tied the weakness directly to the war in Iran, with companies in manufacturing, wholesale, transport and travel reporting reduced turnover linked to the conflict and to higher energy and fuel costs. Brent crude briefly traded above $100 a barrel and UK wholesale gas prices climbed sharply in the run-up, feeding through to business costs .
The single-month figure is volatile and the broader trend is still positive — GDP grew 0.7% in the three months to April and was up 1.2% on the year — but it is the first hard reading on how the conflict is filtering into the real economy. The mechanism to watch is the energy channel: as long as oil and gas prices stay elevated, the drag on energy-intensive and discretionary spending is likely to persist, regardless of whether the just-announced US-Iran deal holds.