UK Economy Grew 0.1% in August, Defying Forecasts of a Contraction

The UK economy grew 0.1% in August 2026, beating analyst expectations that called for a 0.1% contraction, according to data published by the Office for National Statistics on October 15. The result marks a positive surprise ahead of Chancellor Healey's first Budget, though the pace of growth slowed from the 0.4% recorded in July.

The August expansion was driven by a 0.8% rise in production output, while the services sector showed no growth and construction fell 0.2%. On a three-month basis, services output grew, but production and construction contracted. The goods trade gap also narrowed, contributing to the better-than-expected headline reading.

The data arrives at a politically sensitive moment, giving the government a modest tailwind before the Budget while also underscoring that the underlying momentum in the economy remains uneven, with two of the three main sectors either flat or falling in the month.