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LONDON – The UK economy grew 0.2% in August compared to the previous month, preliminary figures released by the Office for National Statistics showed on Friday.
Gross domestic product (GDP) was in line with the expectations of economists polled by Reuters, who had forecast growth of 0.2%.
UK economic growth increased by 0.2% in the three months to August, compared with the 0.5% recorded in the three months to July.
The UK’s dominant services sector showed mild growth of 0.1% in the month to August, while manufacturing and construction output rose 0.5% and 0.4% respectively.
The country’s economy slowed in June and July, after recording modest but steady growth in most months this year. England emerged from one shallow recession at the beginning of the year.
Finance Minister Rachel Reeves welcomed the data, saying getting the economy back to growth was the government’s “number one priority”.
“While change will not happen overnight, we will waste no time in delivering on the promise of change,” she said in a statement. A new Labor government was voted into power in July in a snap election.
The reading comes as Reeves prepares to deliver his Autumn Budget later this month, with raise taxes and cut spending is expected as she tries to overcome an estimated £22 billion ($29 billion) black hole in public finances. The opposition Conservative Party, which led the country until early elections earlier this year, denies the gap.
Reeves also hinted that she could change the country’s debt rules to free up more cash to boost investment.
The government says the plans are part of its vision of an era “renovate the country” as it tries to inject some optimism into public sentiment after painting a gloomy picture of the state of the economy.
Lindsay James, investment strategist at Quilter Investor, said Reeves faces a “difficult balance” to ensure her decisions do not hinder further economic growth.
“As interest rates began to fall, responsibility shifted from the Bank of England to Rachel Reeves, who now had to make key financial decisions. “You and the Prime Minister have pointed out that ‘pain’ is necessary for future prosperity, but there is a real risk of over-regulation damaging economic growth,” she said.
