The UK economy grew by 0.1% in August, the Office for National Statistics reported, a result that surprised City economists who had forecast a 0.1% contraction. Growth slowed from 0.4% in July.
Energy costs and fiscal pressure
The war in the Middle East and the Iran war have pushed up energy costs for UK households and businesses. The chancellor faces pressure to announce a support package in his budget. Government borrowing costs have risen sharply, narrowing the room for manoeuvre.
The chancellor is due to address the Commons on October 28 with his tax and spending plans.
Business activity and the IMF view
Official figures suggested strong AI-related business activity contributed to the surprise rise. The UK recorded the strongest growth rate in the G7 in the first half of 2026.
The International Monetary Fund this week upgraded its UK growth forecasts for 2026. It expects a modest slowdown in 2027 as higher energy prices weigh on growth.
Source: Office for National Statistics · IMF
