UK GDP Grew 0.4% in Q2 2026: News, August 2026

Three things worth an investor’s attention this fortnight, and they are connected. The quarterly growth figure landed today, long-dated gilt yields spent the week deciding whether inflation is beaten, and the savings market quietly inverted in a way that tells you what banks expect rates to do.

GDP grew 0.4 per cent in the second quarter

The ONS published its first estimate for April to June on 13 August: real GDP up 0.4 per cent on the quarter, after 0.6 per cent in the first, and 1.2 per cent higher than the same quarter a year earlier. GDP per head, the number that actually tracks whether the average person is better off, rose 0.4 per cent on the quarter and 1.0 per cent on the year. Monthly, June grew 0.3 per cent after a flat May, which was revised down from 0.1 per cent, and an April that shrank 0.1 per cent.

The composition is more interesting than the headline. Services grew 0.5 per cent and did nearly all the work, with information and communication up 2.7 per cent and professional services up 1.7 per cent. Production was flat, with manufacturing up 1.0 per cent cancelled out by falls in utilities. Construction managed 0.3 per cent on the quarter but is still down 2.0 per cent on the year. Two caveats before anyone acts on this: first estimates get revised, and the ONS’s own guidance notes a historical mean revision of about 0.08 percentage points between first and final figures. And more importantly, a quarterly growth print is not an investment signal. The evidence on this is unambiguous and uncomfortable: country GDP growth has a famously weak relationship with country stock returns, because markets price expected growth long before the statisticians measure it. If a number like this changes your allocation, the problem is the allocation. Our guides to asset allocation between stocks and bonds and common investing mistakes cover why. The release is at the ONS.

The 10-year gilt crossed 5 per cent, then came back

On 11 August the yield on the 10-year gilt briefly topped 5 per cent as oil prices rose on US and Iran tensions, on the argument that persistent energy-driven inflation would force the Bank of England to hold rates higher for longer. Within the same day it fell back below 5 per cent on reports the two sides were close to an arrangement over the Strait of Hormuz, and by 13 August it stood at about 4.94 per cent. Bank Rate itself has been unchanged at 3.75 per cent since the Monetary Policy Committee’s 30 July meeting, with the next decision on 17 September.

A move like that inside 48 hours, driven by a geopolitical headline rather than any UK data, is a useful reminder of what a bond fund actually holds. Yields up means prices down, and a longer-duration fund moves more for the same yield change than a short one. This is not a reason to abandon bonds, it is a reason to know your duration and to hold bonds for the job they do in a portfolio rather than for a return forecast. Our guide to asset allocation between stocks and bonds sets out that job, and risk tolerance and time horizon is the honest test of whether you can sit through weeks like this one. The yield data is at Trading Economics.

Five-year savings bonds hit 5.00 per cent while one-year fixes fell again

Moneyfacts’ weekly survey on 13 August has the best one-year fixed bond down for another consecutive week to 4.85 per cent AER, while the two-year rose to 4.90 per cent and both the three-year and five-year reached 5.00 per cent. Best easy access held steady at 5.00 per cent AER from LemFi, though that rate includes a 1.89 per cent bonus that expires after six months.

An upward-sloping savings curve, where you are paid more for locking money away longer, has been unusual for most of the last three years, and it is a straightforward statement of what banks expect: rates lower in a few years than they are now. For anyone deciding between cash and investing, it also sharpens the comparison. A guaranteed 5.00 per cent nominal over five years is a real return of roughly 2 to 2.5 per cent if inflation behaves, taxed as income unless it is inside an ISA, and with no chance of doing better. That is an excellent home for money you will need in that window and a poor one for money you will not. Our cash ISA vs stocks and shares ISA guide works through where the line sits, and the investment growth calculator lets you compare the two paths with your own numbers. The weekly rates are at Moneyfacts.