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Commuters cross London Bridge in London, England.
Peter Summers | Getty Images News | Getty Images
The U.K. economy grew 0.6% in the first quarter, according to preliminary figures from the Office for National Statistics on Thursday.
It matches what economists polled by Reuters expected for the January-March period, following revised growth of 0.2% in the fourth quarter.
"Growth picked up in the first quarter of the year, led by broad-based increases across the services sector," Liz McKeown, director of Economic Statistics at the ONS, commented on X on Thursday.
Production also grew slightly, she added, and while construction returned to growth, that was only partly reversing weakness at the end of last year.
There were indications that the Q1 data could be positive after an unexpected 0.5% expansion in February, data last month showed, but the Iran war will have weighed on macroeconomic data since then.
The conflict between Iran and the U.S. has since put global energy supply chains under severe strain because of the effective closure of the Strait of Hormuz maritime passage. through which around 20% of the world's oil and gas was transited before the war,
The U.K., a net energy importer, has already seen consumer prices rise during the war, largely driven by rocketing fuel costs. The Bank of England, which has said that the severity of the hit to the British economy will depend on how long the war lasts, is expected to hike interest rates this year.
Adding to economic uncertainty in the U.K., Prime Minister Keir Starmer has faced calls to step down in the last week following the ruling Labour Party's dismal performance in local elections a week ago.
While Starmer has vowed to remain in office for now, he remains vulnerable to leadership challenges with a cohort of over 90 Labour lawmakers wanting him to resign.
Bond markets have not reacted kindly to the possibility of a change in leadership that could result in a more left-leaning PM who loosens the purse strings; U.K. borrowing costs rose earlier this week, with the yield on the benchmark 10-year gilt trading at over 5%.
This is a breaking story. Please check back for updates.
