The UK economy unexpectedly grew by 0.1 per cent in August, according to official statistics. This expansion followed several months of high growth and defied a Bloomberg poll of economists, which had predicted a 0.1 per cent contraction for the month.
The August figures were primarily driven by a significant 0.8 per cent growth in the production sector. In contrast, the dominant services sector did not increase activity, and construction saw a decline of 0.2 per cent.
Over a three-month period, the UK economy recorded a 0.7 per cent growth. Liz McKeown, ONS economic statistics director, noted that "GDP growth showed further strength in the latest three months," attributing robust growth to upward revisions in services for June and July, despite no growth in services during August.
Looking at the longer term, compared to the same three-month period a year ago, increased strength in services is evident across various business-facing industries, including computer programming, legal services, research and development, and advertising.
This latest data set appears to conclude a period of high growth for the UK economy. Chancellor John Healey faces a difficult Budget in two weeks, where his fiscal flexibility is believed to have narrowed. The Bank of England's Monetary Policy Committee is also expected to raise interest rates in November, which could further dampen economic momentum.