The UK economy grew unexpectedly in August, according to official figures published on Thursday, offering a modest improvement in the economic outlook ahead of the Chancellor's Budget later this month.
The Office for National Statistics (ONS) estimated that gross domestic product (GDP) increased by 0.1% in August 2026, following growth of 0.4% in July. Economists surveyed by Reuters had forecast a 0.1% fall.
Growth over three months reaches 0.7%
GDP grew by 0.7% in the three months to August compared with the previous three-month period. The ONS also revised its estimates for the three months to June and July upwards to 0.5% growth in each period.
Over the three months to August, services output increased by 0.9%, while production declined by 0.2% and construction output fell by 1.0%.
Manufacturing supports August increase
The monthly rise was driven by a 0.8% increase in production output. Services output was unchanged on the month and construction contracted by 0.2%.
Consumer-facing services fell by 0.3% in August, reflecting continued weakness in some activities linked to household spending. The mixed sector figures indicate that growth was not uniform across the economy.
Figures arrive ahead of the Budget
The release comes as Chancellor John Healey prepares for the Budget scheduled for 28 October, amid continuing debate over inflation, borrowing costs and the public finances.
Although August's GDP figure exceeded market expectations, the monthly increase was small and slower than July's 0.4% expansion. The ONS describes the data as estimates, which may be revised as further information becomes available.
GDP measures the volume of economic output; it does not, on its own, show whether household living standards or individual disposable incomes have improved.