Economy grew 0.1% in August ahead of chancellor's first Budget
The uptick helped the economy grow by 0.7% over the three months to August, official figures show.
According to the latest official figures before Chancellor John Healey's Budget, the UK economy expanded by 0.1% in August, surpassing analysts' expectations. This modest increase followed a 0.4% growth in July and positive assessments from the International Monetary Fund (IMF). Healey still faces the challenge of presenting a balanced Budget without resorting to additional borrowing.
The economy's growth in August was driven by increased production, encompassing manufacturing, oil and gas extraction, and energy supply. However, the services industry, which constitutes the largest portion of the UK's economy, remained unchanged, while the construction sector contracted. Over the three months leading up to August, the UK's economy grew by 0.7%.
ONS director of economic statistics, Liz McKeown, attributed the robust growth to computer programming. Nonetheless, production and construction sectors experienced a decline over the three-month period.
Notably, the earlier estimate for June's monthly growth was revised upward from 0.3% to 0.4%. Paul Dales, chief UK economist at Capital Economics, stated that the economy is performing better than anticipated. Despite an anticipated rise in inflation dampening growth, he noted the economy's resilience to higher energy prices and borrowing costs.
PwC senior economist, Jake Finney, highlighted that the development of AI infrastructure is bolstering Britain's relatively strong performance. While the UK falls short of the US in terms of investment scale and growth boost, it is still ahead of many European counterparts, according to Finney.
Chancellor Healey recently visited Bangkok for the IMF's annual meeting, where the global financial watchdog commended the UK's plans to reduce debt levels. IMF Managing Director Kristalina Georgieva remarked that the country is demonstrating a better growth prospect compared to other G7 nations. Healey expressed satisfaction with the IMF's support for the UK's economic plans and pledged to remain on course as he prepares to deliver the Budget in two weeks.
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