September GDP growth offers little reassurance as wider economic outlook remains bleak

According to this morning’s ONS data, monthly GDP grew by 0.2% in September 2026, after showing no growth in August 2026 (revised down from a 0.1% growth in our previous publication), and an unrevised growth of 0.4% in July 2026.

The growth in September 2026 was driven by a 0.2% growth in services, with production growing by 0.3%, and construction rising by 0.8% in September 2026. Meanwhile, the trade in goods deficit widened by £6.1 billion to £61.5 billion in Quarter 3 2026, while the trade in services surplus is estimated to have narrowed by £0.1 billion to £51.1 billion.

The surprise 0.2% uplift in GDP in September offers a modest boost, following a month in which growth flatlined in August. However, the broader economic outlook remains bleak, with little to suggest that the Chancellor’s recent Budget will be enough to put the economy on a sustained growth trajectory.

The Bank of England’s first rate hike in three years, with markets now pricing in a further three increases, signals a return to tighter financing conditions, which could dampen investment and spending appetite. Ongoing geopolitical conflicts and market turbulence are adding to the uncertainty, while the Autumn Budget did little to ease the tax burden, with many firms continuing to grapple with high employment costs and mounting cost pressures.

In fact, we are seeing confidence in the Labour government waning, even among businesses that have consistently backed the party.

All of this is putting further pressure on businesses, many of which are already reforecasting for 2027.

We would urge businesses to focus on their operational readiness, ensuring ready access to finance if needed, and minimising their FX exposure to ensure they can remain resilient to any further headwinds.