UK economy sees meager growth of 0.1% in August, in line with expectations

The British system expanded by a lackluster 0.1% successful August, according to the latest figures from the Office for National Statistics.

Economists polled by Reuters had expected month-on-month maturation of 0.1%. The ONS revised its maturation information for July, which initially showed the system flatlining, saying it present assessed that the system had shrunk by 0.1%. That followed a 0.4% enlargement successful June.

The system grew by a better-than-expected 0.3% in the 2nd quarter, down from 0.7% seen successful the archetypal quarter, which was boosted by the beforehand loading of concern enactment up of U.S. commercialized tariffs successful April.

The slowdown successful maturation is not a surprise, with economists forecasting a moderation successful economical activity. Third-quarter GDP is owed to beryllium released successful mid-November and volition beryllium intimately watched for signs of a deceleration.

"Some people correction is apt aft an fantabulous commencement for the U.K. economy," Sanjay Raja, Deutsche Bank's main U.K. economist, said successful emailed comments this week.

"Indeed, aft a beardown archetypal fractional of 2025 momentum, we expect maturation to displacement to a little cogwheel successful the 2nd fractional [of the year]. We spot quarterly GDP tracking astir 0.2% quarter-on-quarter – but determination are downside risks brewing."

Economists are looking up to the Bank of England's adjacent gathering connected Nov. 6 to spot whether the cardinal bank's policymakers volition ballot to little involvement rates further successful bid to boost growth. The main obstacle to that is sticky inflation, with the user terms scale astatine 3.8% successful August.

Nonetheless, economists accidental determination is simply a lawsuit for complaint cuts arsenic the labour marketplace weakens (with the unemployment complaint rising) and wage maturation pressures proceed to ease.

The BOE's Monetary Policy Committee (MPC) could beryllium cautious astir meddling with involvement rates up of the government's Autumn Budget connected Nov. 26, however.

Finance Minister Rachel Reeves is expected to denote tax rises and spending cuts that could enactment a dampener connected user spending, concern business and, ultimately, growth.

Economists astatine Goldman Sachs said successful investigation Tuesday that portion determination was a lawsuit for cutting, the BOE was apt to privation to spot much advancement connected ostentation earlier cutting rates again, aft a trim successful August lowered the benchmark involvement complaint to 4%.

"In particular, normalisation successful measures of underlying services ostentation — which portion retired the sound related to volatile and regulated prices — has stalled successful caller months. Moreover, header ostentation is apt to stay adjacent to 4% successful the remainder of 2025 fixed upward unit from nutrient prices, successful particular."

Goldman said it expected to spot important advancement successful services ostentation successful the archetypal fractional of 2026, but believed the MPC "is apt to hold with much cuts until they spot tangible advancement successful services inflation."