# UK economy grows 0.1% in August despite spending fall

> Surprise growth confounds forecasts and gives Chancellor John Healey a boost before his first budget on October 28.
- Title: UK economy grows 0.1% in August despite spending fall
- Summary: Surprise growth confounds forecasts and gives Chancellor John Healey a boost before his first budget on October 28. The UK economy grew zero point one…
- Keywords: uk economy, gdp growth, john healey, budget 2026, consumer spending, manufacturing, energy prices, office for national statistics, news, world, economy, grows
- Source: the Guardian — https://theguardian.com/business/2026/oct/15/uk-economy-unexpectedly-grows-01-in-august-despite-fuel-hit-to-household-budgets
- Published: 2026-10-15T06:05:17+00:00
- Read time: 1 min
- Topics: uk economy, gdp growth, john healey, budget 2026, consumer spending, manufacturing, energy prices, office for national statistics, news, world
## UK economy grows against the odds
The Office for National Statistics reported UK gross domestic product rose zero point one percent in August, confounding City economists who forecast a zero point one percent contraction.
## Growth slowed from July's pace
August's zero point one percent growth compared with zero point four percent growth in July, as the Middle East conflict and rising energy costs hit British households and businesses.
## Consumer spending fell sharply
The consumer-facing services sector fell zero point three percent in August following a zero point one percent decline in July, with sports, amusement and food and drink services hit hardest.
## Manufacturing drove the surprise
The production sector, which includes manufacturing, mining and energy generation, grew zero point eight percent in August. Construction output fell zero point two percent.
## Wider growth picture remains strong
Gross domestic product over three months to end of August rose zero point seven percent. On an annual basis the economy grew two point one percent, the strongest rate since August two thousand twenty-two.
## Economists warn of slowdown ahead
Sanjay Raja, chief UK economist at Deutsche Bank, said the UK's resilience story continues, but analysts expect momentum to falter as households come under pressure from rising inflation and energy bills.

> The UK's resilience story continues. It's hard to overstate how strong the UK performance has been all year.
## Healey faces budget balancing act
Chancellor John Healey will announce his tax and spending package on twenty-eighth October under pressure to support households, while the International Monetary Fund upgraded UK growth forecasts but warned of slowdown in two thousand twenty-seven.
## Key takeaway

The UK economy grew zero point one percent in August against forecasts of contraction, driven by manufacturing strength despite falling consumer spending.