Macro · London
UK economy contracts 0.1% in April as Iran war energy shock hits growth
The UK economy contracted 0.1% in April after a 0.3% expansion in March, as rising energy prices from the Iran war and Strait of Hormuz closure squeezed household finances and services output.
In brief
GDP fell 0.1% in April, following a 0.3% expansion in March, according to ONS data.
Services output declined, dragging the economy lower, though construction partly offset the fall.
Rising energy prices caused by the Iran war and the closure of the Strait of Hormuz squeezed households.
Chancellor Rachel Reeves criticised Donald Trump's role in unleashing the conflict, calling it 'folly'.
Three-month growth to April was 0.7%, but fears mount that the economy could contract in Q2.
- 31 MarGDP grows 0.3% as consumers bring forward spending amid war concerns
- 30 AprGDP contracts 0.1% due to energy price shock from Iran war; three-month growth 0.7%
Key figures
The UK economy shrank by 0.1% in April, according to data released today by the Office for National Statistics. The contraction follows a 0.3% expansion in March, which economists attributed to households and businesses rushing to spend before the Iran war disrupted supply chains and energy markets. Over the three months to April, GDP grew by 0.7%, but the monthly swing underscored the war’s sudden impact. The services sector, accounting for roughly four-fifths of UK output, was the main drag, although construction output rose to partially offset the decline.
War-driven energy shock
The downturn is directly linked to the Iran war and the closure of the Strait of Hormuz, a critical energy chokepoint. Higher oil and gas prices have fed through to household bills and business costs, squeezing disposable income and dampening service-sector activity. The Guardian noted that the strong first-quarter growth had been widely expected to slide into reverse. The Telegraph described April’s figure as a “sharp reversal” of the previous month’s momentum, with the war’s energy shock hitting the domestic economy hard.
Political response
Chancellor Rachel Reeves pushed back against suggestions that domestic policy was at fault. She argued that the UK entered the crisis with robust fundamentals and redirected blame toward the conflict’s instigators. According to The Guardian, Reeves criticised Donald Trump’s role, calling it “folly” to have unleashed the war that has now ricocheted onto British households. Her comments reflect a growing political narrative that Britain is a victim of geopolitical missteps, rather than the author of its own economic troubles.
Risks ahead
The data reinforces fears that the UK could tip into a second-quarter contraction if elevated energy prices persist. The government has yet to announce new support measures, despite calls from opposition parties and business groups. May and June figures will be scrutinised for signs of a longer slowdown, but for now, the trajectory is shaped by events beyond Westminster’s control.