Manufacturing leads and services have stalled as budget pressures build. The UK economy grew marginally in August, as official figures showed a 0.1% rise after a revision, following a 0.1% fall in July.
Manufacturing provided the uplift, expanding by 0.7%, while the much larger services sector was flat.
Growth was 0.3% on a rolling three-month basis in August. The Office for National Statistics said services held steady, and the drag from production eased.
Ministers have prioritised growth ahead of November’s Budget, yet most economists expect only subdued momentum in the months ahead. Many analysts also think tax rises or spending cuts will be necessary to meet the Chancellor’s borrowing rules. Momentum remains fragile overall.
The Institute for Fiscal Studies estimates a £22 billion gap in the public finances. It says Rachel Reeves will almost certainly have to raise taxes to fill it. The Chancellor said that she is considering further measures on tax and spending to ensure the numbers add up.
Internationally, the IMF expects the UK to be the second-fastest-growing advanced economy this year. However, it also forecasts the UK will have the highest inflation in the G7 in both 2025 and 2026, driven by higher energy and utility costs.
The Treasury said the UK has recorded the fastest growth in the G7 since the start of the year, while acknowledging that many people still feel the economy is “stuck”. It said the Budget will focus on helping businesses grow, investing in infrastructure and cutting red tape to get Britain building.
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