UK economy returns to growth in August after two flat months
The UK economy grew by 0.2% in August after it was flat in the previous two months, according to the latest official figures.
The Office for National Statistics (ONS) said gross domestic product (GDP was up from no growth in June or July.
It was in line with economist predictions but is nevertheless a boost for Chancellor Rachel Reeves ahead of this month’s autumn Budget.
ONS director of economic statistics Liz McKeown said: “All main sectors of the economy grew in August, but the broader picture is one of slowing growth in recent months, compared to the first half of the year.
“In August, accountancy, retail and many manufacturers had strong months while construction also recovered from July’s contraction.
“These were partially offset by falls in wholesaling and oil extraction.”
The services sector was the main contributor to growth, up 0.1% in August after a similar rise in July.
Meanwhile, the smaller production sector swung to 0.5% growth after a 0.7% contraction in July, revised from a 0.8% estimate in last month’s figures.
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Construction output grew by 0.4% in August, following an unrevised fall of 0.4% in July, and grew by 1% in the three months to August 2024.
Chancellor Rachel Reeves said: “It’s welcome news that growth has returned to the economy.
“Growing the economy is the number one priority of this government so we can fix the NHS, rebuild Britain, and make working people better off.
“While change will not happen overnight, we are not wasting any time on delivering on the promise of change.”
Bank of England rate setters are next set to meet in November, where most economists have predicted another quarter-point rate cut.
However, Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales, said the positive GDP figure do not mean a rate cut is certain.
“While interest rates are still likely to fall in November, these positive figures mean it’s not quite a done deal by giving the more hawkish rate setters enough encouragement over economic conditions to hold off voting to relax policy,” she said.
Several business surveys have also shown a fall in confidence in September, after Ms Reeves warned of “tough decisions” at the upcoming Budget.
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