The UK economy eked out growth of just 0.1% in August, a modest recovery from a 0.1% contraction in July, according to the Office for National Statistics (ONS). The weak performance highlights the ongoing stagnation facing the British economy.
While the services sector showed some resilience, with continued strength in business rental and leasing as well as healthcare, this was partially offset by weakness in consumer-facing services and poor performance from wholesalers. The construction sector also suffered a downturn during the month.
The meagre growth figures point to limited momentum in the third quarter, with the economy still struggling to regain its footing. Economists warn that the outlook remains weak, with uncertainty around the upcoming Budget and expectations of slower government spending weighing on activity for both households and businesses.
Labour minister Stephen Kinnock acknowledged that “stagnation is going to take a while to overcome,” though he insisted there were “green shoots of recovery.” However, the care minister said there was “clearly a lot more to do” to address the economic challenges facing the country.
The weak data is unlikely to prompt the Bank of England to cut interest rates in November, with inflation still running high. Analysts now expect the next rate cut to come in February 2026 as policymakers seek to balance supporting growth with tackling persistent price pressures.
Overall, the UK’s economic performance continues to disappoint, with the country failing to capitalise on its status as the second-fastest growing economy in the G7 so far this year. Restoring business and consumer confidence will be crucial in the months ahead as the government navigates a challenging fiscal landscape.
