The UK economy grew by a modest 0.2% in August, broadly in line with market expectations, according to the latest GDP figures from the Office of National Statistics (ONS).
On a three-month basis economic activity grew by 0.3% between June and August.
Analysts from Pantheon Macroeconomics said these figures showed economic activity is on a ‘flat-to-slightly-rising-trend” and should “becalm fears” that the UK was on the cusp of another recession.
But despite this anaemic growth, economists said this latest GDP data should strengthen the case for the Bank of England continuing to keep interest rates on hold.
Overall consumer services were one of the biggest driver of this growth — up by 0.4% in August, but there were falls in several other sectors including construction, down by 0.5%, and production output, which fell by 0.7% last month. This was in contrast to a 0.4% fall in construction and a 1.1% contraction in production output in July, both figures that were revised by the ONS this month.
The ONS also revised downwards its overall GDP figure for July — from 0.5% to 0.6%, making the contraction in economic activity over the summer worse than forecast expectations. This is the biggest month-on-month contraction since June 2022.
Wealth Club head of investment research Jonathan Moyes says: “It was pleasing to see the UK produce a modest 0.2% growth in August. Growth was in line with consensus forecasts, but on a quarterly basis, the economy remains in the slow lane, with GDP up 0.3%.”
He adds: “Whilst growth may be nothing to write home about, the economy does appear to be shaking off fears of a looming recession. Forecasters have long predicted a recession that has yet to arrive. The economy may continue to find a way to muddle through, despite the weather.”
