The UK economy showed growth in August following two consecutive months of stagnation, according to the latest data from the Office for National Statistics (ONS). Gross domestic product (GDP) increased by 0.2% in August, a significant improvement from the zero growth seen in both June and July. The rise aligns with predictions from economists and comes as a positive development for Chancellor Rachel Reeves just before the autumn Budget.
Liz McKeown, the ONS director of economic statistics, highlighted that all main sectors of the economy experienced growth in August. Sectors such as accountancy, retail, and manufacturing performed well, with construction rebounding from a contraction in July. However, decreases were noted in wholesaling and oil extraction.
The services sector played a key role in driving growth, with a 0.1% increase in August following a similar rise in July. The production sector also saw a turnaround, recording 0.5% growth after a 0.7% contraction in July. Construction output rose by 0.4% in August and by 1% in the three months leading up to August 2024.
Chancellor Rachel Reeves expressed her satisfaction with the news of economic growth, emphasizing the government’s commitment to boosting the economy for the benefit of citizens. While anticipations of an interest rate cut persist for the Bank of England’s November meeting, positive GDP figures may introduce some uncertainty into the decision.
The data also reflects a reassuring uptick in economic activity, particularly in sectors like retail and manufacturing, attributed to factors such as easing inflation and favourable weather conditions. However, concerns linger over the impact of speculation surrounding the upcoming Budget and its potential effects on economic performance moving forward.
As the government prepares to host major businesses to stimulate investment and job creation across the country, the economy’s resilience in the face of recent challenges provides a hopeful outlook. While the need for tough decisions remains, the return to growth signifies progress in the recovery process as the UK navigates evolving economic conditions.