In August, the UK’s economy grew by 0.2%, marking a recovery following months of stagnation.
- This growth was largely driven by the manufacturing and construction sectors, with increases of 0.5% and 0.4%, respectively.
- The services sector, which covers three-quarters of the economy, also rose by 0.1%.
- Economists predict moderate GDP growth for the remainder of the year, although it remains below the government’s targets.
- Lower interest rates have eased borrowing costs and bolstered household incomes, as inflation sees a decline.
In a sign of economic recovery, the UK’s economy expanded by 0.2% in August, according to data from the Office for National Statistics (ONS). This marks a resurgence following two months of economic stagnation, driven by notable improvements in manufacturing and construction.
Manufacturing output grew by 0.5%, while construction saw a 0.4% rise in August, recovering from the declines experienced in July. Together, these sectors played a critical role in steering the economy back to growth.
The services sector, which comprises about 75% of the UK economy, witnessed a modest growth of 0.1% in August, maintaining its July growth level. Within this sector, half of the 14 subsectors, particularly scientific, technical, and professional services, experienced growth.
The economy had shown stronger growth at the beginning of the year but has slowed in recent months. Economists forecast GDP growth of 0.3% to 0.4% for the final two quarters, resulting in an annual growth rate of between 1.2% and 1.3%, a figure which does not meet the government’s G7 growth target. The United States, in contrast, is expected to achieve a 2.6% growth rate in 2024.
August also marked the first interest rate cut in four years, benefiting consumers by reducing borrowing costs and mortgage rates. This, along with a decrease in inflation from 2.2% in August to a projected 1.9% in September, has enhanced real income growth for households.
The UK economy’s slight growth in August signals a cautious recovery amid ongoing challenges.
