UK GDP grows 0.1% in August before budget update

The Office for National Statistics said in official data published Thursday that UK gross domestic product rose 0.1% in August from July, beating forecasts for a 0.1% contraction.

Gross domestic product, the broadest measure of economic output, slowed from 0.4% growth in July. The August gain gives Finance Minister John Healey limited support before the Labour government’s Oct. 28 budget presentation.

The ONS said GDP expanded 0.7% in the three months to the end of August. Liz McKeown, ONS director of economic statistics, said that “computer programming was once again the largest contributor to growth in the three months to August”.

The data point to uneven momentum in the UK economy. The expansion came despite a fall in consumer spending, while business activity was helped by technology-related demand.

“We still expect the coming rise in inflation to dampen growth, but the economy is more robust than we thought,” Paul Dales, chief UK economist at Capital Economics, said.

Prime Minister Andy Burnham has put cost-of-living pressures at the centre of his Labour government’s agenda. Healey has pledged strict fiscal discipline but has not said whether the budget will include tax increases to reduce Britain’s debt burden.

The policy setting is constrained by rising inflation and government bond yields reaching multi-decade highs. Higher oil and gas prices are expected to feed through to household bills, with little sign of an end to the Middle East war.

Dales said the economy showed a split between companies and households. “There is a bit of a divergence going on within the economy, with businesses performing well (partly due to AI-related spending) while households are becoming more circumspect,” he said.

Samuel Edwards, head of client portfolio management at Ebury, said in a client note that the IMF’s weaker outlook for 2027 showed the UK was “far from out of the woods”. He said higher energy prices linked to the Iran conflict risked renewed inflation, potentially forcing the Bank of England to raise interest rates further.

Edwards also said fragile confidence and the possibility of tax increases in the Autumn Budget could lead consumers to reduce spending and companies to delay investment. The next scheduled fiscal event is Healey’s budget presentation on Oct. 28.

Source: news article, Euronews, Oct. 15, 2026