Iran energy shock may reverse some of UK’s strong Q1 momentum: Deutsche Bank in World Economy News 08/06/2026 Britain’s economy is likely to lose steam in the second quarter of 2026 as an energy shock stemming from the Iran conflict squeezes household incomes and raises business costs, Deutsche Bank said. The bank’s Chief UK Economist Sanjay Raja said gross domestic product likely dipped marginally into negative territory in April, with risks skewed to the downside, after two months of strong outperformance to close out the first quarter. Deutsche Bank now sees UK GDP expanding 1% for the full year, with second-quarter growth of just 0.1% quarter-on-quarter and second-half growth of 0.2%. “With the energy shock from the Iran conflict in full swing, household incomes will likely be squeezed,” Raja said. “The cost of living and the cost of doing business will have likely increased, weighing on activity and investment.” Services, the backbone of the UK economy, likely contracted 0.1% month-on-month in April. Core retail sales volumes fell 0.4%, while automotive fuel sales dropped 10.2% – the sharpest monthly decline since November 2020 – as motorists delayed filling tanks amid rising prices. Clothing stores fell 2.4%, with retailers citing variable weather and increased consumer price sensitivity. A 24% year-on-year surge in new car registrations partly offset those declines, pushing overall retail and wholesale output up 0.3% month-on-month. Hospitality output was also expected to have dropped, with the RSM-CGA Hospitality Tracker recording a 0.4% year-on-year decline. Restaurant sales grew just 0.1% compared to April 2025, a sharp deceleration from 2.5% growth in March, while pub sales fell 0.2%. Deutsche Bank translated this into a 0.8% month-on-month contraction for the sub-sector. Information and communications services, which grew 1.6% across the whole of the first quarter, was forecast to drop 0.6% month-on-month. Industrial production held some momentum, with o