UK GDP Grew 0.1% in August, Defying City Forecasts

By Amara Osei

The UK economy grew 0.1% in August, defying City economists who had forecast a 0.1% contraction. The Office for National Statistics published the monthly GDP estimate on October 15, delivering a surprise positive print a fortnight before Chancellor John Healey's first budget.

The growth figure marks a slowdown from July, when GDP expanded 0.4%. But it lands on the upside of expectations. Economists polled in the Square Mile had braced for the first monthly contraction, and the data refused to deliver one.

What does the August number actually show?

The ONS monthly estimate put GDP growth at 0.1% for August. That's the second consecutive month of expansion, following July's stronger 0.4% reading.

The surprise cuts both ways for the narrative. Growth continued, but it decelerated — from 0.4% to 0.1% — even before any budget measures take effect.

Consumer spending fell over the month, according to the ONS data. That makes the headline growth figure more striking: the economy expanded even as households pulled back.

Why does this matter for John Healey?

The timing is the story. Healey is due to deliver his first budget as chancellor within a fortnight of the release — roughly two weeks after the October 15 data drop.

A contraction would have handed him a shrinking economy to frame fiscal policy around. Instead, he gets an economy that kept growing, however modestly, despite pressure on household budgets.

The 0.1% figure gives the chancellor breathing room, not bragging rights. Growth is a third of July's pace, and the consumer — the traditional engine of UK output — spent less in August.

How wrong were the forecasts?

Wrong by 0.2 percentage points, in direction and size. City consensus expected GDP to shrink 0.1%; the ONS reported it grew 0.1%.

For forecasters, that's a meaningful miss on a monthly series. For markets and budget planners, it's a reminder that monthly GDP carries revision risk and volatility — a single month's print rarely settles an argument.

What should watchers look at next?

The budget itself. Healey's first fiscal statement arrives in roughly two weeks, and the August data will shape its political reception — a growing economy softens claims of urgent stimulus, while the fall in consumer spending sharpens the case for cost-of-living measures.

September's GDP print will follow, showing whether August's 0.1% was a floor under a slowdown or the start of a steeper slide from July's 0.4%.

The August figure is a fact; its meaning depends on what the next two prints and the budget deliver.