Healey promises business-cost relief in his first Budget if it can be funded within it
The UK economy grew 0.1% in August, defying forecasts of a slight contraction, the ONS figures show. Chancellor John Healey is promising relief on business costs in a Budget two weeks away, on the condition that it is paid for inside that Budget.
The Board Room · Leadership desk
Key figures: the UK economy grew 0.1% in August, defying analysts' forecasts of a slight contraction. That followed growth of 0.4% in July. Over the three months to August the economy grew 0.7%.
| Figure | Value | Note | Claim |
|---|---|---|---|
| UK economic growth in August | 0.1% | forecasts had expected a slight contraction | 1 |
| Growth in July | 0.4% | 3 | |
| Three months to August | 0.7% growth | 2 |
What happened
- August's lift came from production, while services, the largest part of the economy, were flat and construction contracted.
- The IMF upgraded its forecast for the UK economy this year earlier this week and praised the government's plans to cut debt.
- Healey said the Budget would be tough and would not include inflation top-ups for public sector pay.
Why it matters
- What it limits constraint Business relief has to be financed by savings or revenue found elsewhere in the same Budget, so each concession narrows what is left for everything else.
- Who's exposed exposure Departments pressing for extra cash compete with business relief for the same limited room, and some of their backers are experts and unions.
- Who has to decide decision The package will be set on August's data, yet Capital Economics' Paul Dales expects higher inflation to dampen growth afterward, so the funding has to hold in weaker months.
The surprise is measured against a forecast of contraction. Monthly growth was 0.4% in July [3] and 0.1% in August [1], so the pace slowed by 0.3 percentage points [18]. The ONS also revised June's monthly growth up to 0.4% from 0.3% [4].
Healey has attached a condition to his own promise. He said he wanted "to give people a bit of breathing space from the cost of living and cost of business pressures" [7]. He also said "where we want to do things we have to make sure we can pay for them within the Budget that we've got and control spending" [9]. The tradeoff is direct: any relief for business has to be matched by a saving or a revenue line elsewhere, in a Budget he has called tough [10]. He did not elaborate on what measures he will take, but said "where we can take action, we will" [8].
Opposition parties dispute the framing. Shadow chancellor Andrew Griffith said: "Construction has now shrunk for four months in a row, with private housebuilding falling fastest." [16] Liberal Democrat Treasury spokesperson Daisy Cooper called the August growth "nothing to celebrate" [17]. The ONS account is mixed. Its director of economic statistics, Liz McKeown, said production and construction both shrank over the three months, and also described overall growth over the period as "robust", with computer programming the biggest contributor [6].
The IMF gives Healey a reason to keep the condition. He called the growth "part of the discipline the IMF here in Bangkok this week has endorsed that they see in Britain" [14]. Earlier in the week the fund praised the UK's plans to cut debt levels while global borrowing costs were rising, and its managing director, Kristalina Georgieva, said the country was seeing "a bit of a better growth prospect" than other G7 nations [13]. In our view, the endorsement Healey has just cited is a reason to keep the funding condition, and so to size any relief by what can be found elsewhere in the Budget.
What to watch
- Whether the Budget in two weeks names the savings or revenue that pay for any business-cost relief.
- Whether departments get extra cash after Healey ruled out inflation top-ups for public sector pay.
- Whether construction's four-month decline and flat services continue in the next ONS monthly readings as inflation is expected to rise.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence68
- Adoption
- Not scored
- Hype gap+20
- Incentives60
- Confidence70
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
ONS figures showed the UK economy grew by 0.1% in August, defying analysts' forecasts of a slight contraction.
- [2]
The ONS figures showed the UK economy grew by 0.7% in the three months to August.
- [3]
August's growth followed growth of 0.4% in July.
- [4]
The ONS upgraded its estimate for June's monthly growth to 0.4% from 0.3%.
- [5]
The economy was boosted in August by an increase in production, which includes manufacturing, oil and gas extraction and energy supply; services, the largest part of the economy, were flat during the month and the construction sector contracted.
- [6]
ONS director of economic statistics Liz McKeown said computer programming was the biggest contributor to what she described as "robust" growth over the three months to August, and said the production and construction sectors shrank over the three-month period.
- [7]
Healey said he wanted "to give people a bit of breathing space from the cost of living and cost of business pressures", promising to do so when he delivers his first Budget in two weeks' time.
- [8]
Healey did not elaborate on what measures he will take in the Budget, but promised "where we can take action, we will".
- [9]
Healey said: "where we want to do things we have to make sure we can pay for them within the Budget that we've got and control spending".
- [10]
Healey said the Budget would be tough and would not include inflation top-ups for public sector pay.
- [11]
Some experts and unions have called for extra cash for some departmental budgets.
- [12]
The International Monetary Fund upgraded its forecast for the UK economy this year earlier this week, and praised the UK's plans to cut debt levels.
- [13]
Earlier this week the IMF praised the UK's plans to cut debt levels, with global borrowing costs on the rise, and managing director Kristalina Georgieva added that the country was seeing "a bit of a better growth prospect" than other G7 nations.
- [14]
Healey said the growth was "part of the discipline the IMF here in Bangkok this week has endorsed that they see in Britain".
- [15]
Capital Economics chief UK economist Paul Dales said the economy was "more robust than we thought", showing "remarkable resilience to higher energy prices and borrowing costs", but warned that an expected increase in inflation would still "dampen growth".
- [16]
Shadow chancellor Andrew Griffith said: "Construction has now shrunk for four months in a row, with private housebuilding falling fastest."
- [17]
Liberal Democrat Treasury spokesperson Daisy Cooper said the growth of 0.1% in August was "nothing to celebrate".
- [18]
Monthly growth slowed by 0.3 percentage points from July (0.4%) to August (0.1%).
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Sources
1 independent publisher whose own reporting we read for this story.
- bbc.co.ukHealey says surprise UK growth is 'sign of resilience' ahead of Budget
1 article · October 15, 2026
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