Bank of England 'surprised how well' UK economy absorbed energy shock ahead of this week's Budget
John Healey, whose Autumn Budget in two weeks must address a cost of living crisis, as the economy grew just 0.1% in August — far below the summer's 0.4% pace.1% August growth figure, which came in below some forecasts but still exceeded the predictions of analysts who had expected a flat reading.
Bank of England Deputy Governor Sarah Breeden said she was "surprised" by the economy's resilience, crediting firms for absorbing higher energy costs rather than passing them on to consumers, as attention now turns to what the UK's 0.1% growth in August means for the Chancellor's looming Autumn Budget. The 0.1% expansion defied economists' forecasts of a contraction, driven by an 0.8% surge in factory output — the fastest rate in nine months, though Labour reportedly cannot take credit for the performance.
Breeden, speaking in Bangkok at IMF meetings, said businesses had 'learned lessons' from the 2022 energy shock and were better hedged this time.
The Bank rate stays at 3.75% but markets are pricing in a near-certain quarter-point rise when the Monetary Policy Committee meets on 5 November.
Services output was flat in August and construction fell 0.2%, exposing how uneven the recovery remains despite the headline beat.
