The latest data from the Office for National Statistics shows the UK economy grew just 0.1% in August — a modest improvement after July’s 0.1% fall, but still a sign of how finely balanced things are at the moment.

This small uplift was driven largely by manufacturing, which expanded by 0.7%. By contrast, the much larger services sector — responsible for around 80% of UK output — was completely flat.

Over the three months to August, GDP grew 0.3%. Better than contraction, but not a surge.

What’s going on under the surface?

Manufacturing picking up
Production has been a drag for much of the year, so its improvement in August helped soften weaknesses elsewhere.

Services stuck in neutral
The services sector holding steady isn’t a disaster, but it also isn’t the growth the Government has been hoping for ahead of the 26 November Autumn Budget.

Budget pressures building
Economists remain cautious. Growth is expected to stay subdued into the winter, particularly as higher taxes, rising costs and squeezed public finances limit room for manoeuvre.

The Institute for Fiscal Studies estimates a £22 billion gap in the public finances — a shortfall the Chancellor will almost certainly need to address.



That typically points to one of two things:

• tax rises
• spending cuts

       (or a combination of both)

Rachel Reeves has said she is considering “further measures” to ensure her Budget balances the books.

How does the UK compare internationally?

The IMF’s latest outlook provides a mixed message:

• The UK is expected to be the second-fastest-growing advanced economy this year.
• But it’s also forecast to have the highest inflation in the G7 in 2025 and 2026, driven mainly by energy and utility costs.

The Treasury has highlighted the UK’s position as the fastest-growing G7 country so far this year, while acknowledging what many households and businesses feel: the economy still feels “stuck”.

What does this mean for businesses?

The big takeaway is that conditions remain uncertain. Growth is there — but only just. And with the Budget only weeks away, businesses should expect:

• potential tax changes
• policy shifts to support investment and growth
• possible reforms targeting productivity and infrastructure

Now is a good time to revisit your forecasts, review your cashflow and prepare for a few different Budget scenarios.

If you’d like help planning for the months ahead or understanding how the Autumn Budget may affect you, talk to me about your business.