United Kingdom: Growth pace cools after hot start – Deutsche Bank
Deutsche Bank economists Sanjay Raja and Maui Brennan expect United Kingdom (UK) Gross Domestic Product (GDP) to have slipped slightly in July after strong growth earlier in 2026. They forecast a modest monthly contraction led by services and production, with construction only marginally higher.
Deutsche Bank economists predict a modest decline in the United Kingdom's GDP in July 2026, following a strong start to the year. The contraction is expected to be driven by the services and production sectors, with construction showing only slight growth. Despite this temporary dip, the bank maintains its projections of UK GDP expanding by 1.1% in 2026 and 1.3% in 2027, with growth fueled by increased productivity and AI-related investment.
Recent surveys indicate positive economic sentiment, and the July drop is believed to be a small adjustment for an economy operating at an unsustainable 2% annualized growth rate. The bank expects economic momentum to remain steady, with a 0.1% month-over-month contraction in July, primarily due to declines in services (-0.1% m-o-m) and production (-0.3% m-o-m).
Moving forward, the economists anticipate a range-bound economic climate, potentially influenced by a lingering impact from the energy shock.
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