The UK economy experienced growth in August, but the “broader picture” indicates a “slowing” trend in recent months, according to the official statistics body. Speaking to BBC News, the Office for National Statistics (ONS) reported that a recovery in construction and a strong performance from accountancy, manufacturing, and retail sectors contributed to a 0.2% economic boost after stagnation in the previous two months.
However, economic growth remains weaker compared to the first half of the year, as noted by the ONS. These figures are released as the government gears up for the Budget at the end of October. Prime Minister Sir Keir Starmer has commented to BBC News that the upcoming Budget will be “painful,” with acknowledgments from the government that some taxes will increase.
Liz McKeown, director of economic statistics at the ONS, commented to BBC News that accounting, bookkeeping, and auditing businesses were instrumental in bolstering the economy alongside retail and manufacturers in August. She also mentioned that construction rebounded from July’s downturn with new infrastructure projects starting up but cautioned, “The broader picture is one of slowing growth in recent months, compared to the first half of the year.”
Ben Jones, lead economist at the CBI business group, noted to BBC News that some firms have “paused hiring and investment decisions” pending “more clarity over the direction of the new government’s economic policies” in the Budget.
Barret Kupelian, chief economist at PwC, remarked to BBC News that “the big question mark is the government’s vision for the economy,” emphasizing that sustained economic growth requires certainty for businesses, households, and foreign investors to make informed choices.
There is increasing speculation about potential tax rises that Chancellor Rachel Reeves might announce. The government has promised not to increase taxes on “working people” and has ruled out hikes in VAT, national insurance, or income tax.
The upcoming Budget will be a significant opportunity for the government to outline its spending and taxation priorities amidst higher debt post-pandemic, elevated interest rates, and inflation that has only recently stabilized. Reeves plans to adjust borrowing rules to allocate more funds for major projects aimed at stimulating economic growth but acknowledges that this will not eliminate the need for further tax increases.
The chancellor stated on Friday that growing the UK economy is the government’s top priority “so we can fix the NHS, rebuild Britain, and make working people better off,” as reported by BBC News.
The ONS tracks GDP on a monthly basis but emphasizes trends over three-month periods. Due to weaker performance earlier in the summer, growth was just 0.2% between June and August compared with the previous three months. At the end of last year, the UK entered a shallow recession with two consecutive three-month periods of contraction. Growth rebounded in the first half of 2024.
