The UK economy unexpectedly grew in August despite a decline in consumer spending, official figures released by the Office for National Statistics (ONS) showed on Thursday. Gross domestic product (GDP) rose by 0.1% last month, following a 0.4% increase in July.
City economists had anticipated a 0.1% contraction for August, making the modest expansion a surprise that ran counter to expectations of cooling activity. The ONS data showed the growth came even as household spending slipped, indicating a mixed performance across different parts of the economy.
The reading will be closely watched in Westminster: it arrives a fortnight before Chancellor John Healey is due to deliver his first budget, and is likely to be framed by ministers as a welcome sign of resilience ahead of fiscal announcements. The timing gives the government a slightly firmer short-term backdrop as it prepares to set out its spending and tax plans.
Analysts and policymakers are likely to treat a single month of data with caution, but the August figures nonetheless interrupt a narrative of outright decline that some forecasters had expected. The ONS release adds to the sequence of monthly indicators that will shape debate in the run-up to the budget and the interpretation of the UK’s near-term economic trajectory.