Britain's economy expanded by 0.4% in the first quarter of 2026, surpassing analyst expectations and signalling a stronger-than-anticipated recovery following months of sluggish performance.

The Office for National Statistics (ONS) confirmed the figures on Friday, attributing the growth primarily to a rebound in the services sector and increased consumer spending. Retail sales rose by 1.2% month-on-month, driven by higher footfall in high streets and a surge in online shopping.

Chancellor Rachel Reeves welcomed the data, saying the figures demonstrated that "the government's economic strategy is working and delivering real results for working people across the country."

However, economists cautioned that global trade uncertainties — particularly the ongoing tariff disputes between the US and major trading partners — could dampen the outlook in the coming months.

"The fundamentals are improving, but we're not out of the woods yet," said Dr Sarah Hammond of the Institute for Fiscal Studies. "Inflationary pressures remain, and interest rates are still elevated compared to pre-pandemic levels."

The Bank of England is expected to hold rates steady at its next meeting, though markets are pricing in a possible cut later in the year if inflation continues its downward trajectory.