UK economy grew 0.1% in August before Healey’s first Budget

The UK economy grew by 0.1% in August, according to Office for National Statistics figures reported on 15 October by the BBC and the Guardian. Growth slowed from 0.4% in July, giving Chancellor John Healey a modest rise in output ahead of his Budget, scheduled for 28 October.

The August result was stronger than City economists had expected: they had forecast a 0.1% contraction, the Guardian reported. The BBC described the August figures as the last set of official economic figures before the Budget. The slower pace than July shows how limited the monthly increase was as Healey prepares his plans.

What drove August’s growth

Consumer spending fell in August, according to the Guardian. The newspaper said official figures suggested strong growth in business activity related to artificial intelligence was one factor behind the overall GDP increase.

The Guardian also reported that the International Monetary Fund had upgraded its forecast for UK growth this year. It expected a modest slowdown in 2027 as higher energy prices took effect.

Household bills add to Budget pressure

For households with mortgages, the TUC estimated £9,034 in additional repayments since 2021, or £1,806 a year. For those with loans, it estimated an extra £1,911, or £382 a year. Its figures also put additional electricity and gas costs at £2,644 per household and water costs at £372 over the period, the Guardian reported.

TUC general secretary Paul Nowak said rising bills were squeezing household budgets and consumer spending. The union called for a social energy tariff and measures to help poorer households and young people with living costs. Healey has pledged to give households ‘breathing space’ in the 28 October Budget while warning that resources to soften the global economic shock are limited, according to the Guardian.