UK economy expands 0.1 percent in August driven by manufacturing and technology

The United Kingdom economy expanded by 0.1 percent in August 2026, defying forecast contractions from economists, according to figures released by the Office for National Statistics on October 15, 2026.

The growth followed a 0.4 percent expansion in July. Gross domestic product grew by 0.7 percent in the three months through August, marking eight consecutive periods of three-month growth. On an annual basis, the economy expanded by 2.1 percent, representing its strongest growth rate since August 2022.

Manufacturing output drove the unexpected monthly increase, expanding by 1.2 percent in August. That helped push the broader production sector, which includes mining and energy generation, up by 0.8 percent. Within the services sector, which recorded flat output overall, computer programming and consultancy services was the largest single industry contributor.

In contrast, consumer-facing services fell by 0.3 percent on the month following a 0.1 percent decline in July. The Office for National Statistics attributed the drop in part to rising petrol and diesel prices and higher energy bills affecting households. Food and drink services alongside sports, amusement, and recreation activities saw notable slumps, which analysts said reflected spending cuts or a reversal of earlier gains from the World Cup and warm weather. Construction output dropped 0.2 percent.

The data comes two weeks before Chancellor John Healey delivers his first budget. Speaking from Bangkok during meetings with the International Monetary Fund and World Bank, Healey attributed the figures to domestic resilience amid global energy shocks and conflicts in the Middle East and Europe.

Healey said:

“This week the IMF have upgraded UK growth for 2026 and said that our fiscal discipline stands out with the lowest deficit in the G7 forecast by 2029 … my budget will build on this approach to drive good growth in every postcode.”

The IMF upgraded its 2026 growth outlook for the UK while warning of a modest slowdown in 2027 as higher energy costs weigh on activity. Deutsche Bank chief UK economist Sanjay Raja noted that elevated energy prices could present further hurdles before the end of the year.