UK Economy Grew 0.4% in July, But Register Data Shows 109,908 Companies in Liquidation
The UK's economy grew faster than expected in July 2026, with GDP expanding by 0.4% according to the Office for National Statistics (ONS)[1], whereas economists had predicted no growth. The expansion was helped by a strong performance from the services sector, particularly computer programming and businesses involved with artificial intelligence and related technologies.[1]
Yet the headline growth figure masks mounting stress across the business landscape. Oil prices have jumped to $105 per barrel amid the US-Iran conflict[2], UK natural gas rose above 200p per therm for the first time since the end of 2022[2], and long-term borrowing costs have surged to levels not seen in decades.[2] The European Central Bank recently raised interest rates to 2.5%, citing the Middle East conflict and warning inflation was "set to remain well above" its 2% target.[3]
Richard Carter, head of fixed interest research at investment firm Quilter Cheviot, warned that "growth is going to be hard to come by so this may not last, especially as activity is likely to stall ahead of the Budget."[1] He added: "The war in the Middle East continues to drive a lot of the economic data, but the UK is the most exposed to the fallout."[1]
Energy Costs and Inflation Pressures
The conflict between the US and Iran has led to the effective closure of the Strait of Hormuz, preventing supplies of oil and gas from the Gulf from reaching global markets.[2] Brent crude went back above $100 per barrel on 10 September 2026 and has continued to climb.[2]
Speaking at a Republican Party convention in Texas on 10 September 2026, President Trump said he did not think the fighting would end until after the US mid-term elections in November.[2] This timeline suggests businesses face sustained pressure from elevated energy costs through the critical autumn trading period.
Chris Beauchamp, chief market analyst at trading platform IG, said: "It feels like investors worldwide are now waking up to the crisis in oil markets."[2] He warned that the surge in energy prices could weigh heavily on the global economy if it continues.
UK consumers are protected from short-term spikes on wholesale gas markets by Ofgem's price cap, but if prices remain high for an extended period, households still face steeper bills.[2] The cap is already due to increase by 3.6% at the start of October, with the next change coming in January.[2]
Borrowing Costs at Multi-Decade Highs
The increase in energy costs has raised fears of a spike in inflation, pushing up yields on government bonds around the world.[2] In the UK, yields on 10-year bonds were at their highest since 2007 on 10 September 2026, while those on 20- and 30-year bonds were at levels not seen since 1998.[2]
This implies a higher cost of borrowing for the government at a time when public finances are under pressure, but could also have a direct impact on households as it affects rates paid by consumers for some financial products, such as fixed-rate mortgages.[2]
Central banks are responding to inflation concerns. The US Federal Reserve is poised to make an interest rate decision next week, with Deutsche Bank economists recently stating that a rate hike is "the most likely policy outcome".[3] The Fed has held rates steady between 3.5% and 3.75% for five meetings in a row, last making a change - a rate cut - in December.[3]
Mixed Signals from July Growth
The ONS director of economic statistics, Liz McKeown, said there was evidence that businesses involved with artificial intelligence and related technologies helped to boost the services sector, not just in July but in May and June as well.[1]
However, she noted that some businesses said the warm weather and football world cup had affected activity in July, with effects that "differed across industries, benefitting some businesses while creating challenges for others".[1]
The three-month picture shows the economy grew by 0.4% in the three months to July compared with the previous three months.[1] This followed growth of 0.3% in June and zero growth in May.[1]
UK Company Register Context
Economy-wide data from the CompanyPulse company register[4] provides context on the state of UK business during this period of competing pressures. As of the latest data, 109,908 companies across the entire UK register are in liquidation, with a further 4,560 in administration, 2,251 in voluntary arrangements, and 1,112 in receivership.[4]
These figures represent the cumulative total of companies in formal insolvency proceedings across all sectors and regions of the UK economy. The liquidation count includes both compulsory liquidations ordered by courts and creditor voluntary liquidations initiated by company directors.[4]
Daily incorporation data for early September 2026 shows continued business formation activity, with 3,225 new companies registered on 7 September and 3,126 on 8 September.[4] In the week ending 10 September, 13,614 new companies were incorporated across the UK.[4]
The register currently contains 6,652,421 total companies, of which 5,589,554 are classified as active.[4] London remains the dominant location for registered companies with 1,037,617, followed by Manchester with 101,396 and Birmingham with 90,837.[4]
Looking Ahead
The contrast between July's growth figures and the rising cost pressures facing businesses suggests the economic outlook remains uncertain. With energy costs elevated, borrowing costs at multi-decade highs, and potential interest rate increases on the horizon, businesses across sectors may face difficult trading conditions in the months ahead.
Carter's warning that growth "may not last" as activity stalls ahead of the Budget reflects broader concerns that the July expansion may prove temporary rather than the start of a sustained recovery.[1] The question for business leaders and policymakers is whether the resilience shown by AI-driven services and other growth sectors can offset mounting pressures from energy costs, financing costs, and geopolitical uncertainty.
