UK economy returned to growth in August

The UK returned to growth in August but the “broader picture” is one of a “slowing” economy in recent months, the official statistics body has said.

A bounce back in construction and strong month for accountancy, manufacturers and retail businesses helped boost the economy by 0.2%, after it failed to grow in the previous two months.

But economic growth is weaker compared with the first half of the year, the Office of National Statistics (ONS) said.

Its latest figures come as the government prepares for the Budget at the end of October.

Prime Minister Sir Keir Starmer has warned the Budget will be “painful”, with the government admitting some taxes will rise.

Liz McKeown, director of economic statistics at the ONS, said accounting, bookkeeping and auditing businesses had helped to boost the economy alongside retail and manufacturers in August.

She added construction also bounced back from July’s downturn, with new infrastructure projects starting up, but added: “The broader picture is one of slowing growth in recent months, compared to the first half of the year.”

Ben Jones, lead economist at the CBI business group, said its surveys of suggested companies “may have tapped the brakes again in September” amid speculation over potential Budget announcements.

“Anecdotally it’s clear that some firms have paused hiring and investment decisions pending more clarity over the direction of the new government’s economic policies,” he said.

There is growing speculation over what tax rises the Chancellor, Rachel Reeves, will announce, given the government has promised not to increase the burden on “working people” and ruled out increasing VAT, national insurance or income tax.

Reeves said on Friday that growing the UK economy was the government’s top priority, “so we can fix the NHS, rebuild Britain, and make working people better off”.

The latest growth figures come ahead of an International Investment Summit in London next week, where the government will try to attract billions of pounds of investment into the UK.

Anna Leach, chief economist at the Institute of Directors, said the government needed to “shift the narrative” away from the country’s debt pile and instead focus on “building tomorrow’s economy”.

“That’s the key to sustainable public finances and higher living standards,” she said, adding both the investment summit and Budget provide opportunities for the government “to drive up investment” by explaining more detail about its plans.

Ahead of the summit, the owner of Scottish Power – Spanish energy giant Iberdrola – announced plans to double its investment in the UK over the next four years from £12bn to £24bn.