Recent geopolitical tensions in the Middle East and associated energy price shocks represent the dominant factor compressing UK Q2 2026 GDP growth expectations toward zero or modestly negative territory after the 0.6% QoQ expansion recorded in Q1. Monthly indicators through May point to flatlining activity, with services output and consumer spending facing headwinds from rising input costs and inflation pressures expected to intensify in the second half of the year. Revised institutional forecasts from the OECD and IMF now embed 0.8–0.9% full-year growth, underscoring the abrupt shift in momentum. The tightly clustered market-implied probabilities across the 0.0–0.3% and negative bands reflect this uncertainty, as traders weigh residual Q1 carryover effects against downside risks from weaker labor-market data and potential Bank of England policy responses ahead of the next quarterly release.