UK Economy Grew Sharply in Q1 2026, but Household Incomes Fell

Real GDP expanded 1.6% in the first quarter of 2026, yet disposable income per capita dropped 0.8%—reversing Q4's 1.2% gain. The divergence signals a structural crack: aggregate output rose while living standards fell. Tax increases, wage growth lagging inflation, and energy and services price pressures likely explain the gap. The tension complicates the Bank of England's monetary policy calculus.