# Reasons to be Cheerful, Part 4

_The ONS has revised second-quarter growth up to 0.5%, which puts the first half of 2026 at 1.2%, the fastest in the G7. Retailers are reporting the same thing, and oil is flowing out of the Gulf again._

Neil Woodford · 30 September 2026 · 4 min read

![London scene with 'cheer up' billboard](https://cdn.sanity.io/images/v3acfbvo/production/05081ef7674bae554d9c1a94d5a3702f3baae04e-1672x941.jpg?w=1600&fit=max&auto=format)

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Regular readers may recall that this was the title of my first Woodford Views (now Noise Cancelling) publication, and, for very good reasons, I thought the time had come to resurrect it. 

_Reasons to be Cheerful, Part 1 – April 2024:_ [Reasons to be Cheerful, Part 1](https://www.noisecancelling.co/read/reasons-to-be-cheerful-part-1) — Contrary to popular belief, the UK economy has performed well against its peers over the last 15 years, and the ingredients are in place for it to continue to perform well. In this first post, we dispel the myth that the UK is and will continue to be a laggard in the G7.

In amongst all the doom and gloom that we hear so regularly about how terrible everything is, and in amongst the utter incompetence of our ruling class, the good old UK economy just shrugs its shoulders and gets on with life.

Today the [ONS has revised up its estimate](https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/quarterlynationalaccounts/apriltojune2026) of how fast the UK economy grew in the second quarter of the year from 0.4% to 0.5%, due to stronger services growth, stronger household spending (where have you heard that before?), business investment (that too) and an export “surge”. 

**1.2%** — UK GDP growth in the first half of 2026, the fastest in the G7

It may not seem that significant, but combined with a very perky first quarter, it means the economy grew by 1.2% in the first half of the year. That’s the fastest growth in the G7, and compares with full-year forecasts from the consensus (as compiled by HM Treasury) of 1.2%, 1.1% from the OECD, 1.0% from the IMF and 0.9% from the EY ITEM Club. _(Neil in the margin: HM Treasury publishes a monthly average of independent forecasts for the UK economy. September’s average for 2026 was 1.2%, up from 1.1% in August.)_

![Stronger than first thought](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/chartDoc.cheerful4.c1-quarterly-4f4415e2a6c1-light.png)

_Today’s revisions lifted the second quarter from 0.4% to 0.5% and last year’s third quarter from 0.1% to 0.2%, and cut the second and fourth quarters of 2025 to zero. That flat second half of 2025 is what the rest of this year is being compared with._

As I have been saying all year, this collection of experts has got it wrong and is underestimating the economy’s resilience against a backdrop of much higher energy prices.

Not surprisingly, this good news hasn’t received much media attention, given that it directly contradicts the very popular narrative that we are all doomed and about to go to the IMF cap in hand.

_Neil on July’s GDP surprise:_ [Clean bowled again](https://www.noisecancelling.co/read/clean-bowled-again) — The consensus said the economy would flatline in July. It grew 0.4%, and the first half of 2026 was the fastest in the G7. The budget on 28 October will be built on five-year projections from the institution that missed all of it.

## Retailers are telling the same story

Aside from this macro headline, I have also been monitoring news from a number of consumer-facing businesses in the UK that have reported in recent weeks, and that corroborate this better macro outcome. Household names like Next, Wickes, Kingfisher (B&Q and Screwfix), Card Factory and Saga have all announced results or trading that is better than expected.

I am not suggesting that the economy is booming, nor am I blind to the ongoing economic challenges we confront. What I am saying, and indeed have been saying consistently, is that the economy will perform a lot better than the consensus believes, and that very much appears to be the case.

Right now, gas, electricity, petrol, and diesel prices have all gone up again following higher commodity prices worldwide, and this will continue to present a headwind to the economy in the second half of the year, just as it did in the first. Where I differ once again from the consensus is that I do not see the economy wilting under these higher energy prices.

![What is already banked for 2026](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/chartDoc.cheerful4.c2-banked-d8d6be18b842-light.png)

_If the economy did not grow at all for the rest of the year, 2026 would still come in at about 1.15%. That is already above the IMF and the EY ITEM Club, level with the OECD and a fraction below the Treasury’s consensus. Each 0.1% a quarter from here adds nearly 0.08% to the year._

Given the relatively easy comparisons with the second half of 2025, when growth on today’s revised figures amounted to 0.2% in the third quarter and nothing at all in the fourth (see the chart above), I see the current momentum in the economy continuing into the second half of this year, albeit at a lower level than in the first half. It’s pretty clear to me that the full-year outcome will once again be materially better than the experts and the media have been saying.

## Oil is flowing again

One other reason to be a little more cheerful is what appears to be happening in the Persian Gulf, despite the ongoing conflict. 

According to a [report from JPMorgan](https://www.energyconnects.com/news/oil/2026/september/jpmorgan-and-goldman-see-mideast-oil-flows-near-pre-war-levels), shipments of crude oil from the Middle East have rebounded to 17.5 million barrels a day, or 98% of pre-war levels, while flows of refined products like diesel and gasoline are at 3 million barrels a day, or 58% of pre-war levels. 

According to Goldman Sachs, the global oil market is “roughly balanced” in September, and it estimates that oil exports from the Persian Gulf have recovered to 23.3 million barrels a day over the last week. The Bloomberg report adds that the Saudi East–West pipeline, recently damaged in a drone attack, has returned to 50% of its normal flow.

![Oil flows out of the Gulf](https://cdn.sanity.io/images/v3acfbvo/production/524725dc9821dd83b41bd719142983c6cae03a35-1600x2520.png?w=1600&fit=max&auto=format)

Despite this news, the crude price remains elevated at $103 a barrel, but the UK gas price has fallen further to 178p per therm from its recent peak of 205p earlier in September.

![Flowing again, if not yet cheap](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/chartDoc.cheerful4.c3-gulf-c9b3f04bae5c-light.png)

_Crude is almost back to where it was before the war. Refined products are still well short of it, which keeps diesel tight. Gas has come off its September peak._

Whilst I expect energy markets to remain stressed in the immediate future, this news, which is consistent with what I have been reporting in recent NC updates, underlines the fact that energy markets are gradually returning to “normal” despite the conflict, and that the point of maximum Iranian leverage over the oil and gas market is well past. Reinforcing this point is [Bloomberg’s report this week](https://www.bloomberg.com/news/features/2026-09-29/uae-s-sheikh-khaled-spending-billions-to-bypass-iran-s-grip-on-strait-of-hormuz) that Abu Dhabi’s Crown Prince, through the $300bn sovereign wealth fund he now runs, is spending billions on port and pipeline infrastructure on the UAE’s east coast, beyond the Strait of Hormuz, as part of a strategy it calls “Zero Hormuz”.

_Last week: diplomacy gathers pace:_ [Diplomacy gathers pace; the Chancellor’s room shrinks](https://www.noisecancelling.co/read/diplomacy-gathers-pace-the-chancellors-room-shrinks) — Iran’s seven-day offer, Xi at the White House and China leaning on Tehran: the diplomacy moved further this week than at any point since the summer. Plus five new AI models in two days and what their prices say, a Chancellor running out of headroom, and some Scottish data that horrified me.

_[Embedded media](https://www.bloomberg.com/news/features/2026-09-29/uae-s-sheikh-khaled-spending-billions-to-bypass-iran-s-grip-on-strait-of-hormuz)_

Whilst it’s sometimes hard to stay upbeat about the economy, given the unrelentingly negative narrative presented by the media and the economic establishment, the truth is it isn’t all bad. The UK economy is far more resilient than is presumed, much like its people. Not only has it performed much better than expected, but I expect this resilience to continue and growth to accelerate next year as energy prices and inflation start to fall, along with interest rates and bond yields. I believe the momentum the economy carries into the final quarter of this year and into next will continue to surprise nearly everyone.