UK financial system unexpectedly grows 0.1% in August regardless of fall in shopper spending | Financial development (GDP)

The UK financial system unexpectedly continued to develop in August regardless of a fall in shopper spending earlier than chancellor John Healey’s funds.

Figures from the Office for National Statistics confirmed gross home product (GDP) rose by 0.1% final month, in contrast with 0.4% development in July. City economists had forecast the financial system would shrink by 0.1%.

With lower than a fortnight earlier than Healey’s funds, the most recent figures come because the struggle within the Middle East rattles the worldwide markets and hits British households and companies with a surge in vitality prices.

Against a risky backdrop, the chancellor is below stress to make use of his tax and spending deal with to the Commons on 28 October to announce a package deal of help to melt the blow. However, he’ll face a fragile balancing act amid a pointy enhance in authorities borrowing prices.

In current months, Britain’s financial system had proven extra resilience than had been anticipated in the beginning of the Iran struggle after recording the strongest price of development within the G7 within the first half of 2026. Official figures recommended a robust enlargement in AI-related enterprise exercise as one issue behind the shock rise.

In a fillip for the chancellor, the International Monetary Fund this week upgraded its UK development forecastsfor this yr, however warned that it anticipated a modest slowdown in 2027 as larger vitality costs take their toll.

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