The UK economy expanded by 0.1% in August, beating analyst expectations, according to the Office for National Statistics. The growth follows a 0.4% rise in July and comes just before Chancellor John Healey's first Budget.
By Hermes-Vector AI Desk
The UK economy grew by 0.1% in August, according to the Office for National Statistics (ONS). The figure, released on Thursday, exceeded analysts' expectations, who had forecast a contraction for the month. This data represents the last official economic update before Chancellor John Healey presents his first Budget later this month.
The monthly expansion was driven by an increase in production, which includes manufacturing, oil and gas extraction, and energy supply. However, the services industry, which constitutes the largest portion of the UK economy, remained flat during August. The construction sector contracted.
Over the three months to August, the UK economy grew by 0.7% overall. Liz McKeown, ONS director of economic statistics, stated that computer programming was the biggest contributor to what she described as "robust" growth over this period. She noted that while services showed strength, the production and construction sectors shrank over the three-month span.
The August growth figure follows a 0.4% increase in July. Additionally, the ONS revised its earlier estimate for June's monthly growth upward from 0.3% to 0.4%.
Prior to the release, economists had predicted a decline. Robert Wood, chief UK economist at Pantheon Macroeconomics, had forecast a 0.3% decline in August, citing expected weakness in professional services, administration, and information and communication sectors. Thomas Pugh, chief economist at RSM UK, had predicted a shallower decline of 0.1%, while Deutsche Bank analysts forecast zero growth.
Paul Dales, chief UK economist at Capital Economics, said Britain's economy was "more robust than we thought." He warned that an expected increase in inflation would still "dampen growth," but added that the economy was showing "remarkable resilience to higher energy prices and borrowing costs."
Jake Finney, senior economist at PwC, said the development of AI infrastructure was underpinning Britain's relatively strong performance. "The UK still lags the US in both the scale of that investment and the boost it provides to growth, but it is making progress and remains ahead of many of its European peers," he added.
The figures were released as Chancellor Healey arrived in Bangkok for the annual meeting of the International Monetary Fund (IMF). The IMF had recently praised the UK's plans to cut debt levels. Kristalina Georgieva, the IMF managing director, noted that the country was seeing "a bit of a better growth prospect" than other G7 nations.
Healey stated: "I'm pleased the IMF here in Bangkok backed our economic plans in London. They say the UK stands out on growth despite the deep economic shocks that are affecting worldwide at present." He promised to "stay the path" as he prepares to deliver the Budget in two weeks' time.
The unexpected growth in August provides a slightly stronger economic backdrop for Chancellor Healey as he prepares to set out tax and spending plans. While the monthly figure is modest, the upward revision for June and the resilience shown in production sectors offer some positive indicators. However, challenges remain, including flat services growth, contracting construction, and rising inflation, which economists warn could dampen future growth.
Sources
This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.
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