UK Economy Grows 0.1% in August Ahead of Healey’s First Budget

What changed

The UK economy grew 0.1% in August, down from 0.4% growth in July. These are the final official growth figures before John Healey delivers his first Budget on 28 October.

Production rose, while services output was flat and construction contracted.

Why it matters

The headline is growth, but the detail is less comfortable. The increase came from production, while the largest part of the economy, services, went nowhere and construction shrank. That leaves Healey with a narrow base for presenting stronger growth alongside tax and spending plans.

The IMF has recently said the UK’s growth outlook is improving and backed its plans to reduce debt. That gives Healey some outside support as borrowing costs rise globally, but it does not remove the central Budget problem: he still has to balance his plans without relying on more borrowing.

My reading is that August offers a modest bit of breathing room, not a durable trend. Whether the 0.1% increase persists remains uncertain, and the Budget’s tax, spending and borrowing measures are still unknown.