An early summer of heatwaves and sporting events contributed to an upturn in consumer spending that helped GDP remain largely resilient, and employment levels remained ‘relatively benign’.

However, the latest figures reflect a period where energy bills were protected, and the price cap has since increased by 13%. Stop-start conflict between Iran, the US and Israel is still a headline problem, and experts warn that we are yet to see its full consequences.

Though the nation’s economic position could be far worse, growth is still weak, and inflation continues to climb. As attention turns to the recently appointed chancellor and his upcoming Autumn Budget, the latest figures reveal more about how the economy performed in the first half of the year and paint a picture of the fiscal conditions Burnham’s government has inherited.

GDP – June 2026

• In the three months to June 2026 compared to the three months to March 2026, UK GDP grew by 0.4%. This follows a growth of 0.6% in the three months to May, revised down from 0.7%. Compared with the same month a year ago, GDP is estimated to be 1.1% higher in June 2026.
• Services output grew by 0.5% (down 0.1% on the previous three months), making the main contribution to real GDP. Production output showed no growth, while construction output grew by only 0.3% after recording 1.5% growth (revised down from 1.6%) in the last release.
• GDP grew by 0.3% in the month of June, after showing no growth in May 2026 and falling 0.1% in April 2026 — surpassing forecasters’ expectations for zero growth. The ONS attributed this to a 0.4% rise in services, which was partially offset by falls of 0.2% in production and 0.1% in construction.
• The unexpected resilience of UK GDP led Deutsche Bank to announce a new annual growth estimate of 1.1%, higher than the International Monetary Fund’s 0.8% spring forecast. However, experts warn that this resilience is unlikely to last due to high inflation and rising fuel costs.

Inflation – July 2026

• The Consumer Prices Index (CPI) rose by 2.9% in the 12 months to July 2026, up from a 15-month low of 2.6% the previous month. This was the first rise in the annual rate since March and in line with economists’ predictions.  
• Core CPI (CPI excluding energy, food, alcohol and tobacco) rose by 2.6% in the 12 months to July 2026, unchanged from the 12 months to June and slightly higher than City economists’ 2.5% forecasts. 
• The increase in headline inflation aligns with rising gas and electricity costs. Britons faced the sharpest summer increase in energy bills in four years following renewed conflict in the Middle East, and the energy bill cap rose by 13% at the start of July.  
• As the US-Israel war with Iran continues to cause volatility, the Bank of England may raise interest rates as early as next month. 

Employment

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

• The UK unemployment rate for people aged 16 and over remained at 4.9% in the three months to May 2026. This is up by 0.2% year-on-year but down by 0.1% on the latest quarter. 
• Job vacancies decreased, with early estimates for May to July 2026 suggesting a 0.8% fall to 707,000 compared to the February to April 2026 period. The ONS notes that the vacancy rates have remained broadly flat this year so far, with survey feedback suggesting that some small firms may not be recruiting because of high labour costs and operating expenses. 
• Youth unemployment remained concerningly high, with the rate for people aged 16 to 24 sitting at 16.2% in the three months to June, compared with 14.3% at the same time in 2025. 
• The UK economic inactivity rate for people aged 16 to 64 was estimated at 20.9% in April to June 2026, largely unchanged on the year and latest quarter. 
• The annual growth rate in employee earnings (excluding bonuses) was 3.5% in April to June 2026, showing relatively stable growth for another consecutive period. Adjusted for inflation using the Consumer Prices Index including owner occupiers’ housing costs (CPIH), annual wage growth in real terms was 0.5% for regular pay, the second consecutive increase following a recent low of 0.1% in the three months to April 2026. However, growth has been slowing over the previous two years, down from 2.6% in June 2024. 

Insolvencies – July 2026

There were 1,931 corporate insolvencies reported in England and Wales in July 2026, a 5% higher rate compared to June 2026 (1,847) as economic pressures continued to mount.  

These insolvencies consisted of 288 compulsory liquidations, 1,497 creditors’ voluntary liquidations (CVLs), 124 administrations and 22 company voluntary agreements (CVAs). CVAs saw the biggest change both MoM (+57%) and YoY (+83%), while CVLs and compulsory liquidations were higher than the previous month but lower than the previous year. Administrations were also 33% lower in July 2026 than in June 2026, when around 60 connected real estate companies entered administration.   

Overall, company insolvency rates have increased over the past five years, but they remain lower than their peak during the 2008-09 recession. This is due to the number of registered companies more than doubling during this period. 

On the individual insolvency side, there were 11,926 personal insolvencies recorded in England in Wales in July 2026 — similar to the June 2026 rate, but a significant 14% increase on the year. The month saw the highest number of individual voluntary arrangements (7,442) since November 2022, with the exception of December 2025, which was affected by the clearing of a case backlog. 

Pressure builds ahead of the Autumn Budget 

Though the latest economic figures were, once again, more hopeful than many expected given the circumstances, there are several ongoing issues that may impact the government’s ability to offer much-needed respite for UK businesses. 

Most recently, it was announced that UK borrowing costs had hit the highest rate since June 2008, with the interest rate on UK 10-year bonds having jumped to over 5.2%. Though yield moves have been relatively small, they will chip away at the amount of fiscal headroom available to the chancellor as he prepares for the Budget, especially with the growing need to balance public and defence spending. Deutsche Bank economists estimate the £26bn margin from spring forecasts could fall to less than £14bn by the time the Budget is announced on 28 October.  

The Prime Minister pledged a business rate cut for pubs, clubs and live music venues, which was welcome news to many in the sector. Yet there are several other industries, including manufacturing and construction, that are struggling to shoulder the burden of high operating and labour costs. Insolvencies are high in these sectors, and business leaders will be looking for support in the coming months as the US-Israel war with Iran continues to drive up energy prices. The Employment Rights Act 2025 could also increase labour costs for SMEs that already operate with thin margins.  

Until the Autumn Budget reveals more about the support that will be made available to UK households and businesses and how changes to taxation might impact operations, it will be crucial for business leaders to take a cautious approach to risk and seek early advice should any signs of financial strain start to show. 

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.