UK economy grows surprise 0.1% in August, defying forecasts of a contraction ahead of the 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.
Britain's economy beat expectations by growing 0.1% in August, driven by a 1.2% surge in manufacturing — its fastest production growth in nine months — after analysts had forecast a 0.1% decline. Chancellor John Healey hailed it as "welcome news" and a "sign of resilience", though the construction sector fell 0.2% and bars and restaurants saw a 2.7% drop. The economy grew 0.7% over the three months to August and the IMF has raised its UK growth forecast for next year to 1.3%. The pound rose on the news.
Labour reportedly cannot take credit for the growth, with global factors and business adaptability driving the figures.
Bank of England deputy governor Sarah Breeden expressed surprise at how effectively firms had absorbed the energy price shock from the Iran war, noting that businesses hedged their costs rather than passing them on to consumers.
Traders have priced in a near-certain quarter-point rate rise at the Bank's Monetary Policy Committee meeting on 5 November.
