UK economy "ekes out" 0.1% growth but outlook remains "challenging"

Monthly GDP unexpectedly grew by 0.1% in August 2026, following an unrevised growth of 0.4% in July 2026 and a growth of 0.4% in June 2026 (revised up from a 0.3% growth in our previous publication).

The growth in August was driven by a 0.8% growth in production, with services showing no growth, and construction falling by 0.2% in August 2026.

Meanwhile, the trade in goods deficit widened by £2.5 billion to £59.1 billion in the three months to August 2026, while the trade in services surplus is estimated to have widened by £1.1 billion to £51.1 billion.

The UK economy unexpectedly eked out 0.1% growth in August, ending what was a relatively resilient summer, but the outlook remains challenging.

 While the IMF has upgraded its growth forecast for this year, its gloomier outlook for 2027 suggests the UK is far from out of the woods. Rising energy prices linked to the ongoing Iran conflict risk reigniting inflation, potentially forcing the Bank of England to raise interest rates further and piling more pressure on households and businesses.

With confidence already fragile, the prospect of further tax rises in the Autumn Budget could see consumers rein in spending and businesses put investment on ice.

Against this backdrop, businesses must strengthen their financial resilience - keeping operations lean, maintaining access to finance and using effective FX hedging to limit exposure to further volatility.