UK tops the G7 as spending and investment rise, but the recovery remains fragile

This is an abbreviated article by Liz Barclay – read the full article at Business111.com/news

Britain’s economy has finally delivered some good news. Growth is up, we’re leading the G7, consumers are spending and businesses are investing. But before anyone cracks open the champagne, small businesses are still battling soaring costs and global uncertainty threatens this fragile recovery.

New ONS figures show GDP grew 0.4% in the second quarter of 2026, following 0.6% in Q1. The UK is now 1.2% bigger than a year ago and looks set to top the G7 growth league for a second consecutive quarter.

After years of stagnation, inflation and economic shocks, are we finally seeing green shoots?

Consumers are spending

Hot weather and England’s World Cup run boosted retail, hospitality, food and drink, advertising and television production.

June GDP alone rose 0.3%, while construction managed 0.3% growth despite heatwaves, skills shortages and rising costs.

Businesses are investing

Services grew 0.5%, manufacturing held steady and concerns about supply-chain disruption fell from 38% in April to 31% in June.

There’s better news on living standards too. Real GDP per person increased 0.4% during the quarter and is 1% higher than a year ago.

It’s hardly a boom, but it’s movement in the right direction.

Don’t celebrate yet

There are plenty of reasons for caution. Energy bills are rising, petrol and diesel remain expensive, heatwaves have disrupted productivity and global conflict continues to threaten supply chains and confidence.

And Britain’s recent economic pattern has been painfully familiar: a promising start to the year followed by a weaker second half.

Most importantly, many small and micro businesses aren’t feeling the recovery. They’re still struggling with employment costs, energy bills, weak margins and other pressures while postponing investment and recruitment.

The green shoots may finally be appearing, but they remain fragile.

If Government wants growth in every postcode, it needs Britain’s smallest businesses growing and investing too.

For now, Britain is enjoying some rare economic sunshine.

The challenge is keeping the green shoots alive when the weather inevitably turns.

This is an abbreviated article by Liz Barclay – read the full article at Business111.com/news

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