UK GDP Beats Forecasts With 0.1% August Growth — SkimNews
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- The U.K. economy grew 0.1% month-on-month in August, beating a Reuters poll of economists who had expected a 0.1% contraction
- The Office for National Statistics reported production rose 0.8%, services showed no growth, and construction fell 0.2% in August
- Annual U.K. GDP grew 2.1% year-on-year, the highest reading since August 2022 and above forecasts of 1.7%
- Monthly momentum slowed from 0.4% growth in both June and July to just 0.1% in August, signaling a deceleration beneath the beat
- The British pound jumped 0.4% against the U.S. dollar after the release, while the 10-year gilt yield fell 9 basis points to 5.3364%
- The U.K. government is set to unveil its Autumn Budget later this month, tasked with honoring fiscal rules on public debt while addressing a cost-of-living crisis fueled by sticky inflation and energy costs linked to the Russia-Ukraine war and the Iran war
Why it matters: The beat masks a clear slowdown — monthly growth halved from recent trends even as the annual rate hit a three-year high — giving Chancellor Reeves a fragile backdrop for the Autumn Budget, where she must reconcile fiscal rules with voter pressure on living costs. The 9 bps gilt rally signals bond investors read the print as growth-cooling rather than overheating.
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