UK economy unexpectedly grows 0.1% in August ahead of Healey's first budget

Britain's economy grew 0.1% in August, the Office for National Statistics said Thursday, defying economists' expectations of a 0.1% contraction, according to the Press Association and Euronews.

Growth slowed from 0.4% in July, but output rose 0.7% over the three months to August, the eighth straight three-month expansion, the ONS said.

How the sectors performed

ONS figures for August:

| Sector | Monthly change | |---|---| | GDP | +0.1% | | Services | 0.0% | | Production | +0.8% | | Construction | -0.2% |

The Press Association reported manufacturing rose 1.2%, helped by pharmaceuticals, while bars and restaurants fell 2.7%. Construction declined for a fourth straight month, according to the ONS. Euronews said computer programming was again the largest contributor to three-month growth.

Budget backdrop

Chancellor John Healey called the data welcome news and said it showed resilience against global shocks, the Press Association reported. Healey delivers his first budget on October 28, according to Euronews, which said he has pledged fiscal discipline but has not said whether taxes will rise.

Economists struck a cautious note. Yael Selfin of KPMG told the Press Association that higher wholesale gas prices and long-term interest rates could weigh on households. Paul Dales of Capital Economics told Euronews that an expected rise in inflation, driven by energy costs linked to the Iran conflict, could dampen growth.

The next monthly GDP estimate is due November 12.