Britain's economy grew slightly in the three months to August, the Office for National Statistics (ONS) has said.
However, the figure for July has been revised to a 0.1 per cent fall, showing that the economy contracted in the previous data from the initial zero-growth assessment.
Despite this, the news of slight improvement will come as somewhat of a relief to Labour, as growth was central to their core manifesto pledges.
The ONS also reports that GDP grew by 0.3 per cent in the three months to August 2025 compared with the three months to May 2025, a slight increase following growth of 0.2 per cent in the three months to July 2025.
Labour pledged to "kickstart economic growth" in one of the first of the party's five key pledges ahead of the 2024 General Election.
Kevin Brown, savings specialist at Scottish Friendly, reacted to the news by saying: “Today’s GDP figures suggest the UK economy may be finding its feet again after a difficult period.
"Growth, however modest, is a welcome sign that confidence could be slowly returning across sectors.
He said that business are "investing, and employment remains resilient", which he believes should help to "sustain momentum into the next quarter."
Mr Brown said: "For many UK households though, the recovery still feels fragile, as rising living costs and higher borrowing rates continue to squeeze disposable incomes.
"Families need to see growth translate into lower inflation and greater financial stability before they can feel the benefits in their day-to-day lives.”
ONS director of economic statistics Liz McKeown said: “Economic growth increased slightly in the latest three months. Services growth held steady, while there was a smaller drag from production than previously.
“Continued strength in business rental and leasing and healthcare were the main contributors to services growth, partially offset by weakness in some consumer facing services, while wholesalers also fared poorly.”
A Treasury spokesman said: “We have seen the fastest growth in the G7 since the start of the year, but for too many people our economy feels stuck. Working day in, day out without getting ahead.
“The Chancellor is determined to turn this around by helping businesses in every town and high street grow, investing in infrastructure and cutting red tape to get Britain building.”
UK economy GROWS in August in boost for Rachel Reeves with Britain 'finding its feet' | GETTY/ONSHowever, many economists had expected stronger growth for August, citing 0.2 per cent predictions.
Shadow Chancellor Mel Stride responded to the growth figures, telling GB News: "It's totally flat. The figure for July was a contraction of 0.1 per cent, with the IMF saying that we have lowest growth of GDP per capita in the G7.
"The Chancellor will blame everybody but herself."
Lindsay James, investment strategist at wealth management firm Quilter, gave a less than optimistic outlook: “In the week that the International Monetary Fund gave the UK’s economic growth forecasts a small bump up, today’s GDP figures paint a picture of an economy stumbling to the end of the year after a strong start.
"Monthly GDP grew just 0.1 per cent, giving a three-month rate of 0.3 per cent - not exactly exciting figures.
"Markets will have been hoping for signs that the UK can maintain it’s early-year momentum but it appears that has now dissipated just as we approach a crunch Budget statement from the Chancellor.
"Rachel Reeves will need to find a tonic and quickly if she is to extricate the economy from its current malaise."
Real GDP grew in the three months to August
|ONS
Today’s GDP release pointed to continued weakness among service sector businesses catering to consumers.
Consumer-facing services in the UK contracted by 0.6 per cent in the three months to August, with the decline driven by:
- Travel agency, tour operator and other reservation services and related activities (down 7.6 per cent)
- Other personal service activities (down 3.4 per cent)
- Buying, selling, renting and operating of own or leased real estate, excluding imputed rent (down 1.0 per cent)
Sanjay Raja, chief UK economist at Deutsche Bank, has warned that Britain’s services and construction sectors are experiencing a “pre-budget funk” amid growing uncertainty over Rachel Reeves’s fiscal plans.
Commenting on the latest GDP figures, which showed no growth in services during August and a 0.3 per cent fall in construction output, Mr Raja said:
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“Industrial production expanded by 0.4 per cent month-on-month, driven largely by stronger manufacturing growth of 0.7 per cent. The bad news? Both the services and construction sectors have hit a pre-Budget funk.”
He noted that the services economy remained flat for a second consecutive month, with declines in transport and storage, retail activity, particularly due to lower new car registrations, and leisure services.
Construction output fell by 0.3 per cent month-on-month, weighed down by reduced repairs and maintenance activity at the end of summer.
Deutsche Bank now estimates that UK GDP growth in the third quarter is tracking at around 0.2 per cent quarter-on-quarter, roughly half the pace projected by the Bank of England.
Data for sector
|ONS
Services output is estimated to have experienced no growth in August 2025. This is the second consecutive month in which services has shown no growth, after also doing so in July 2025 (revised down from 0.1 per cent growth in our previous bulletin).
The largest positive contribution to services growth in August 2025 came from administrative and support service activities which grew by 1 per cent.
This was mainly caused by a 5.3 per cent increase in rental and leasing activities.
This subsector saw its largest period of growth since July 2020, and has now grown for the last nine consecutive months, in line with widespread growth in this industry.