Preliminary data released by the UK's Office for National Statistics (ONS) on Thursday showed that the UK economy grew by 0.6% quarter-on-quarter in the first quarter. This figure aligns with the expectations of economists surveyed by Reuters for the January-March period. The growth rate for the fourth quarter of last year was revised upward to 0.2%. Liz McKeown, Director of Economic Statistics at the ONS, stated on social media platform X: "The UK economy grew in the first quarter, driven by broad-based strength across the services sector." She added that industrial production also saw slight growth, and construction returned to growth, though this only partially offset the sector's weakness seen at the end of last year. The upward revision of February's growth to 0.4% had already signaled positive momentum for the first quarter. The ONS also reported that the economy grew by 0.3% in March. However, the conflict involving Iran is expected to continue weighing on subsequent macroeconomic performance. The US-Iran conflict has led to a near-standstill of shipping traffic through the Strait of Hormuz, placing immense pressure on global energy supply chains. Before the conflict, approximately 20% of the world's oil and natural gas transited through this strait. A Look in the Rearview Mirror As a net energy importer, the UK has already seen consumer price increases during the conflict, with surging fuel prices being a primary driver. The Bank of England has indicated that the severity of the conflict's impact on the UK economy will depend on its duration. Markets widely anticipate that the central bank will raise interest rates within the year. Fergus Giménez-England, Deputy Economist at the National Institute of Economic and Social Research, commented on Thursday that while Q1 GDP appeared relatively robust, it largely represented lagging data from the past. In an emailed analysis, he noted: "Despite continued growth in March, signs of underlying weakness have emerged following the Middle East conflict: business confidence has been dented, input price inflation is rising, and job vacancy numbers continue to decline." He added: "At the same time, the better-than-expected economic data, combined with resilient consumer spending and Purchasing Managers' Index (PMI) figures, suggests the UK economy is in a period of adjustment rather than a full-blown recession." Political Crisis Intensifies Economic Uncertainty Following a significant defeat for the ruling Labour Party in local elections, Prime Minister Keir Starmer has faced calls to step down over the past week. Although Starmer has stated his intention to remain in office, he still faces challenges from within the party's leadership, with over 90 Labour MPs having called for his resignation. Bond markets have reacted negatively to the risk of a leadership change, as a potential shift to a more left-leaning prime minister would likely lead to increased fiscal spending and a relaxation of fiscal discipline. UK borrowing costs rose earlier this week, with the yield on the benchmark 10-year government bond surpassing 5%. Chancellor of the Exchequer Rachel Reeves commented on the latest growth figures, stating they confirm the government's economic plan is on the right track. In an emailed statement, she said: "Now is not the time to risk economic stability through reckless changes that would only worsen the situation for families and businesses. This government will continue its steady work to build a stronger, more resilient, and future-oriented national economy."