The UK economy grew by 0.6% in the first quarter, helped by a strong services sector and broad gains across manufacturing and construction. This was a better start to the year after weak growth in late 2025 and suggests the economy had some resilience despite the energy shock from the Middle East conflict. However, the outlook is less positive. Some activity may have been brought forward into March before energy costs rose further, while higher oil prices are expected to squeeze household incomes and weigh on business activity. For the Bank of England, stronger growth and rising inflation risks make the interest rate outlook more uncertain, with markets split on whether rates could rise in June. Market reaction was limited: sterling was broadly unchanged at around $1.35, while investors continued to focus on inflation and gilt-market pressure.