Economy Grows Slightly as High Energy Costs Continue to Weigh -- Update

The U.K. economy grew slightly in May, but uncertainty increased as energy costs rose amid renewed U.S.-Iran hostilities around the Strait of Hormuz. Gross domestic product expanded 0.1%, rebounding from a 0.1% decline in April, according to the Office for National Statistics, matching economist expectations from a Wall Street Journal poll. The growth came solely from the services sector, with industrial production and construction both falling back. Economists lowered forecasts for expansion this year as oil prices surged, raising costs for consumers and businesses; the outlook for the Bank of England has also shifted toward at least one quarter-point rate hike from the current 3.75%. The OECD projected growth of 0.9% in 2026 and 1.1% in 2027, down from 1.3% last year, citing productivity gains and fiscal discipline as key longer-term drivers.