Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Strong UK growth at the start of 2026 was “probably part truth, part statistical illusion”, analysts have warned after one of the country’s top statisticians said the uncertainty surrounding the annual Budget process had made it harder to estimate GDP.
Chancellor Rachel Reeves on Thursday said that a bounce in the economy in the first three months of the year showed her policies were bearing fruit and was possible because of “the economic stability that we have brought back”.
But economists noted that the first-quarter expansion of 0.6 per cent matched a pattern seen since 2022, where a growth spurt at the start of the year has fizzled out later, raising questions over the Office for National Statistics’ seasonal adjustment of the data.
“The UK economy’s strong start to the year was probably part truth, part statistical illusion,” said Andrew Wishart, economist at Berenberg bank.
Britain’s most senior statistician pointed to the repeated disruption of the UK’s annual Budget process as one reason it had become harder to adjust the GDP data for seasonal fluctuations in activity in recent years.
Since the pandemic, the traditional pre-Christmas peak seen in non-adjusted GDP data has become much smaller, as has the traditional slump in the new year, James Benford, ONS director-general for economic statistics, said in a blog published alongside the data on Thursday.
This could be the result of a range of factors, but businesses had told the agency in the run-up to last year’s fiscal event that turnover was weaker “because firms and households were waiting for the autumn Budget before making significant financial decisions”, Benford said.
The Bank of England described the same effect in its November monetary policy report, following a period of intense speculation, briefing and leaks concerning the tax measures Reeves might adopt to hit her fiscal targets.
Speculation in the long run-up to Reeves’ first Budget in 2024 cast a similar chill on activity. But the pattern of slow growth at the year-end, followed by a new year rebound, dates back to 2022, when the turmoil of Liz Truss’s shortlived premiership led to not one but two autumn Budgets.
“A consequence of deferred spending will be strong growth in the first quarter, as we have been seeing and are seasonally adjusting for,” Benford wrote, noting that first-quarter GDP might also have been boosted in 2025 by efforts to get ahead of US tariffs and changes to stamp duty paid on residential property transactions.
He added: “It is, however, inherently difficult to judge how much this is part of a new regular pattern that might be established with the move to a single fiscal event, and how much it reflects temporary changes relating to a period of adjustment following Covid-19.”
The ONS cannot know in real time whether a variation in quarterly growth reflects a new, regular seasonal pattern, because it has to see these patterns become established over a number of years.
The ONS has revised down its previous figures for first-quarter GDP growth in 2025 and 2024 — with offsetting upgrades in other quarters — after seeing the same pattern recur this year, and is keeping its estimates of seasonality under review.
The adjustment was meant to ensure the data “gives a clearer read on whether the latest growth rate is stronger or weaker than is usual for the time of year”, it said.
Yet several analysts said Thursday’s data was still likely to overstate the strength of activity.
James Smith, economist at ING, said: “We’re sceptical . . . it follows a familiar pattern.” Tomasz Wieladek, chief European economist at investment company T Rowe Price, said policymakers and investors were likely to “look through” the data because it was “not reflective of genuine strength”.
However Rob Wood, chief UK economist at consultancy Pantheon Macroeconomics, said he did not “simply dismiss the growth rebound as residual seasonality”, since there could be genuine reasons for the uneven pattern seen over the years — many of them tax-related.
“Think of Covid rebound, investment tax changes, two Budgets boosting uncertainty and front-running of spending ahead of US tariffs last year,” he said.