UK economy expands as GDP rises by 0.1% in August ahead of crucial budget

The UK economy expanded by 0.1% in August, according to official figures, giving a lift to Rachel Reeves ahead of next month’s crucial budget. A boost from the manufacturing sector helped the economy improve along with a strong performance by the health sector. However, the Office for National Statistics said it had revised down July’s flatlining growth to a 0.1% contraction, limiting the rise in output over the three months to August to 0.3%. The chancellor is weighing up raising funds from a series of tax rises in her 26 November budget to close a £20bn to £30bn budget spending gap that has opened up this year. The figures were in line with a Reuters poll of City economists, which expected a return to modest growth of 0.1% in August based mainly on a recovery in the manufacturing sector. It keeps the UK on track to meet International Monetary Fund forecasts on Tuesday that it will be the second-fastest growing economy in the G7 group this year. Inflation is forecast to begin easing before the end of the year and the Bank of England is expected to make further interest rate cuts in 2026, easing the pressure on household incomes. A spokesperson for the Treasury said: “We have seen the fastest growth in the G7 since the start of the year, but for too many people our economy feels stuck. Working day in, day out without getting ahead. “The chancellor is determined to turn this around by helping businesses in every town and high street grow, investing in infrastructure and cutting red tape to get Britain building.