Services revisions help drive UK three-month growth after a flat August
UK GDP grew 0.1% in August, the Office for National Statistics said. The 0.7% three-month growth owes part of its strength to revisions, with the Chancellor's Budget about two weeks away.
The Board Room · Leadership desk
Key figures: the UK economy grew 0.7% over a three-month period. Monthly growth was 0.4% in July, which beat market expectations at the time, and UK GDP grew 0.1% in August.
| Figure | Value | Note | Claim |
|---|---|---|---|
| UK economy growth over a three-month period | 0.7% | 11 | |
| Monthly growth, July | 0.4% | 3 | |
| Monthly GDP growth, August | 0.1% | 1 |
What happened
- Economists polled by Bloomberg had forecast a 0.1% contraction for the month, according to City AM.
- Production grew 0.8%, services recorded no growth and construction fell 0.2%, so one sector of the three carried the result.
- July growth was 0.4%, a figure City AM says beat market expectations at the time.
- The BBC noted the August figure followed upgrades to Britain's economic outlook from the International Monetary Fund.
Why it matters
- decision Healey sets his tax choices with the largest sector flat in the latest month and, per the BBC, still has to balance the Budget without more borrowing.
- exposure Arguments against tax rises that cite the 0.7% rest on June and July services figures the ONS has just revised upward, in a month when services added nothing.
- constraint If the Monetary Policy Committee raises rates in November as City AM expects, the rise follows a month when the economy's largest sector did not grow.
Only one of those three sectors grew, and services, which City AM calls the country's most dominant, was not it [9]. The beat over the Bloomberg poll was 0.2 percentage points [15]. The reports do not include sector weights or the size of the revisions, so the split of the 0.1% between sectors cannot be worked out from them.
The three-month figure needs a different reading. Liz McKeown, the ONS economic statistics director, said: "Upward revisions to already strong services growth in June and July helped drive robust growth across the three months, despite services showing no growth in August." [12] On that account the 0.7% [11] depends partly on months that have been restated, and the one month added to the window brought no services growth [9].
The ONS also offers a counterweight. McKeown said that, compared with the same three-month period a year ago, the strength now seen in services was "evident not just in computer programming but across a range of business-facing industries, including legal services, research and development, and advertising" [13]. Because the comparison is with a year earlier, it does not test whether August's stall will repeat.
Earlier readings set a high bar. Growth was 0.6% in the first quarter and 0.5% in the second [4]. The 0.7% is 0.2 points above the second-quarter figure, though the two cover different periods [16].
The data lands on a Budget that the BBC describes as following the last official figures [7], and City AM says the Chancellor's fiscal room is believed to have narrowed [5]. Lord Jim O'Neill said any tax increase at the Budget "needs to be really thought through more carefully than before" [18]. He suggested the economy could be running at two per cent growth on an annualised basis because of a strong first half [19]. Those are arguments from first-half strength. The ONS has revised June and July services growth upward, and August services added nothing [12].
We think the record supports a strong first half and a production-led August. It does not yet show that services momentum survived the month. The Budget will be set on the revised figures, and if later estimates move them again, the tax choices will already have been made.
What to watch
- Any further revision to June and July services growth in the next ONS estimate, which would change the three-month figure the Budget debate leans on.
- Whether the Chancellor's Budget cites the 0.7% three-month figure or the flat August services reading when it sets out tax measures.
- The November Monetary Policy Committee decision, which City AM expects to be a rate rise.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence62
- Adoption
- Insufficient
- Hype gap+8
- Incentives
- Insufficient
- Confidence66
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
UK GDP expanded by 0.1 per cent in August, following several months of high growth.
- [2]
A poll of economists by Bloomberg predicted that the UK economy had contracted by 0.1 per cent in August.
- [3]
Statisticians said growth in July was 0.4 per cent, beating market expectations at the time.
- [4]
Growth in the first three months of the year came to 0.6 per cent, and GDP expanded 0.5 per cent in the second quarter.
- [5]
The Budget is two weeks away and it is believed Chancellor John Healey's fiscal wriggle room has narrowed.
- [6]
Healey still faces a challenge to deliver a balanced Budget without turning to more borrowing.
- [7]
The ONS figures were the last set of official figures before John Healey's Budget, planned for the end of the month.
- [8]
Production sector output grew 0.8 per cent in August.
- [9]
Services, the most dominant sector in the country, did not increase activity in August.
- [10]
Construction output fell by 0.2 per cent in August.
- [11]
Over a three-month period, the UK economy grew by 0.7 per cent.
- [12]
ONS economic statistics director Liz McKeown said: "Upward revisions to already strong services growth in June and July helped drive robust growth across the three months, despite services showing no growth in August."
- [13]
McKeown said that compared with the same three-month period a year ago, the increased strength now seen in services is "evident not just in computer programming but across a range of business-facing industries, including legal services, research and development, and advertising".
- [14]
The August figure followed positive upgrades to the outlook for Britain's economy from the International Monetary Fund.
- [15]
August GDP growth of 0.1% beat the Bloomberg poll expectation of a 0.1% contraction by 0.2 percentage points.
- [16]
The three-month growth figure of 0.7% is 0.2 percentage points above the 0.5% second-quarter figure.
- [17]
The Bank of England's Monetary Policy Committee is expected to raise interest rates in November.
- [18]
Lord Jim O'Neill said any tax increase at the Budget "needs to be really thought through more carefully than before".
- [19]
O'Neill suggested the UK economy could be running at two per cent growth on an annualised basis due to a strong performance in the first half of the year.
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Sources
2 independent publishers whose own reporting we read for this story.
- bbc.co.ukUK economy grew 0.1% in August ahead of Healey's first Budget
1 article · October 14, 2026
- cityam.comUK economy grew unexpectedly after production boost
1 article · October 14, 2026
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