UK economy grows 0.1%, beats forecasts

The UK economy grew 0.1% in August, slowing from July’s 0.4% growth but beating economists’ forecasts of a contraction; output rose 0.7% over the three months to August. Industrial and manufacturing production increased during the month, while services were flat and construction contracted. The figures offer Chancellor John Healey a modest boost ahead of his October 28 Budget, as higher energy prices, inflation and rising government borrowing costs pressure households, businesses and public finances. Healey faces a difficult choice between measures to ease living-cost pressures and tax rises or spending cuts to meet fiscal rules and maintain investor confidence. The IMF upgraded its UK growth outlook for this year but expects growth to slow in 2027 as energy prices weigh on the economy.