The UK economy returns to growth of 0.2% in August after months of stagnation
The UK economy returned to growth in August, expanding by 0.2% after a two-month standstill, according to official figures from the Office for National Statistics (ONS). This growth was in line with economists’ expectations, following 0% growth recorded in June and July.
ONS data showed the economy grew by 0.2% in the three months to August and expanded by 0.8% last year. Growth was driven by a 0.5% increase in manufacturing output and a 0.4% increase in the construction sector, both of which slowed in July. The services sector, which accounts for three-quarters of the UK economy, recorded a 0.1% rise in August, matching its growth in July.
Notably, the share of 14 sub-sectors of the service economy, including scientific, technical, and professional services, grew in August.
After a strong rebound at the start of the year, with growth of 0.7% and 0.5% in the first and second quarters respectively, growth has moderated in recent months. Economists forecast GDP growth of 0.3% to 0.4% in the last two quarters of the year, bringing the annual growth rate to between 1.2% and 1.3%, below the G7 government’s growth target. The US is expected to overtake the UK with an estimated growth of 2.6% by 2024.
“All main economic sectors grew in August, but the broader picture is of slower growth in recent months, compared to the first half of the year,” said Liz McKeown, director of economic statistics at the ONS.
August’s return to growth follows the first interest rate cut in four years, with further rate cuts expected in the coming months. Consumers benefited from lower borrowing costs, home prices, and inflation, which eased to 2.2% in August and is expected to ease further to 1.9% in September, boosting real household income growth.
