UK economy grew by 0.2% in August, official GDP figures show

London: The UK economy grew by 0.2% in August – in line with expectations, according to the Office for National Statistics.

“Our initial estimate suggests GDP grew a little in August, led by strong growth in services which was partially offset by falls in manufacturing and construction,” ONS director of economic statistics Darren Morgan said.

He added the economy has also grown “modestly” over the past three months – mostly led by car manufacturing and sales as well as the construction sector.

But it wasn’t all good news from the Office for National Statistics, which announced it has revised July’s gross domestic product (GDP) further downwards.

Early official figures had already suggested strikes and a summer washout led to a worse-than-expected contraction of 0.5% – but the ONS now believes July’s GDP actually fell by 0.6%.

That’s the biggest month-on-month contraction since June 2022, when there was a one-off bank holiday for the late Queen’s Platinum Jubilee.

Chancellor Jeremy Hunt said: “The UK has grown faster than France and Germany since the pandemic and today’s data shows the economy is more resilient than expected. While this is a good sign, we still need to tackle inflation so we can unlock sustainable growth.”

Pantheon Macroeconomics said August’s GDP report should “becalm fears that the economy is on the cusp of recession” – with industrial action having less of an impact on the economy during the month.

Overall, its analysts believe UK economic activity is on a “flat-to-slightly-rising trend” – and such modest growth shouldn’t stand in the way of the Bank of England keeping interest rates held at 5.25% in future meetings.

At present, investors believe there is less than a 25% chance the Bank will resume rate hikes when the Monetary Policy Committee next meets in November.