The UK economy has managed to surpass expectations once again, with GDP showing small but steady growth despite the months of unrest in the Middle East.

And yet, the latest statistics revealed another increase in inflation as the Iran war continues to compound energy price hikes, creating a more challenging outlook ahead of the upcoming Autumn Budget. Personal insolvencies and unemployment also remain elevated, reflecting the uncertain economic climate many people are currently navigating across the UK.

September’s data releases tell us that whilst there are certainly reasons to remain optimistic, the autumn and winter may be tougher on businesses and households alike. In the summary below, we outline the headline figures and what they mean for British business interests in the months to come.

GDP — July 2026

• In the three months to July 2026 compared to the three months to April 2026, UK GDP increased by 0.4%, matching the growth recorded in the previous period and marking the eighth consecutive three-month on three-month growth.
• Services sector output grew by 0.6%, once again making the largest contribution to GDP growth. Production and construction output both fell by 0.5% each.
• In the month of July 2026, GDP grew by 0.4% following a growth of 0.3% in June and no growth in May. This growth was due to increases across services (+0.4%), production (+0.2%) and construction (+0.1%). July’s economic boost was unexpected, with economists predicting zero growth given the continued fallout from the Iran war. The ONS said services drove the growth, particularly computer programming and consulting, where many of the largest-turnover businesses are involved in AI and cloud computing.
• Though economists note that the economy’s continued resilience is good news, the longer-term picture remains murky. The latest rise in global oil prices to well above $100 per barrel is likely to drive worldwide inflation and increase borrowing costs.

Inflation — August 2026

• The Consumer Prices Index (CPI) rose by 3.1% in the 12 months to August 2026, up from 2.9% the previous month. This increase was largely the result of higher airfares and fuel prices, which the Iran war has pushed up.
• Core CPI (CPI excluding energy, food, alcohol and tobacco) rose by 2.6% in the 12 months to August 2026. This was unchanged from the 12 months to July 2026.
• The prime minister has hinted that the government may have to make ‘difficult decisions’ in response to headline inflation moving further from its 2% target. City economists reportedly expect at least four increases from the Bank of England to reach 4.75% next year.

Employment

The latest Office for National Statistics labour force and employment data show:

• The UK unemployment rate for people aged 16 years and over was estimated at 4.9% in May to July 2026. This is up by 0.2 percentage points on the year but largely unchanged on the latest quarter.
• Job vacancies decreased again, with early estimates for June to August 2026 suggesting a decrease of 8,000 (1.1%) to 702,000, compared with the March to May 2026 period. Vacancy numbers have remained broadly flat this year overall; surveys suggest that smaller firms may not be recruiting due to increasing labour costs. The ONS noted that outside of the COVID-19 pandemic period, the last time there were 702,000 or fewer vacancies was in August to October 2014 (701,000).
• In May to July 2026, 751,000 young people aged 16 to 24 were unemployed — 109,000 more than the previous year. The youth unemployment rate was 16.4%, up from 14.3% the previous year and 0.2 percentage points higher than the three months to June.
• The UK economic inactivity rate for people aged 16 to 64 years was estimated at 20.9% in May to July 2026. This is down by 0.1 percentage points on both the year and the latest quarter.
• The annual growth rate in employee earnings (excluding bonuses) was 3.5% in May to July 2026, the same as the previous period. Adjusted for inflation using the Consumer Prices Index including owner occupiers’ housing costs (CPIH), annual wage growth in real terms was 0.6% for regular pay.

Insolvencies — August 2026

There were 1,946 corporate insolvencies reported in England and Wales in August 2026. This was similar to the July number (1,934) and 3% lower than August 2025 (2,007).

These insolvencies consisted of 314 compulsory liquidations, 1,431 creditors’ voluntary liquidations (CVLs), 182 administrations and 19 company voluntary arrangements (CVAs). Administrations saw the most significant change, up 44% on the previous month and 60% on the year. The Insolvency Service has attributed the volatility of administration rates to the administration of over 250 connected real estate companies. The annual insolvency rate has increased since 2021, but it remains a lot lower than its peak during the 2008-09 recession. This is because the number of companies on the effective register has more than doubled since then.

There were 11,644 individual insolvencies recorded in England and Wales in August 2026. This was, once again, a similar rate to the previous month and 3% higher than August 2025. The number of individual voluntary arrangements (IVAs) was lower than in July 2026, but still higher than the annual average.

UK growth is hard to ignore, but confidence remains low

All things considered, the UK has fared well in 2026 this year. Growth is undoubtedly subdued, but it has nevertheless exceeded expectations in the wake of geopolitical disruption and changing leadership.

But when we look past the surprising robustness of GDP since the Iran war began, it is clear that we are by no means safe from decline. Whilst increasing activity in sectors such as artificial intelligence and cloud computing is supporting productivity, construction and production are shrinking. Government borrowing rates are at an almost 30-year high, and interest rates are predicted to rise. The Bank of England held at 3.75% on 17 September, but three of the nine Monetary Policy Committee members voted for an increase to 4%, and the Bank has warned that a rise becomes more likely the longer energy price volatility persists.

All of this has an impact on investor confidence and makes business leaders more cautious, particularly for SMBs that rely heavily on external finance for cashflow. R3 President Sonia Jordan commented: ‘Recent employment figures suggest hiring activity is slowing and announcements such as Jaguar Land Rover’s planned reduction of around 4,000 roles could have wider implications for businesses further down their supply chain and create knock-on effects in many regions. Where firms are heavily dependent on a single customer or sector, adapting quickly and seeking new opportunities will be critical.’

With that in mind, organisations must reassess their forecasts and investment plans ahead of the Autumn Budget announcement in late October to ensure they are prepared for whatever change it might bring.

If you are seeking professional advice for your business, Opus is here to help. You can speak to one of our specialists, who can discuss options with you. We have offices nationwide and by contacting us on 0203 995 6380, you will be able to get immediate assistance from our Partner-led team.