The Office for National Statistics has reported a slight increase in GDP for the UK economy in August. This growth comes after two consecutive months of stagnation, providing a small boost for Chancellor Rachel Reeves as she prepares for her first Budget later this month. The 0.2 percent growth in August follows no growth in June and July, coinciding with Labour’s victory in the general election.
Economic forecasts had predicted this growth, with Reeves expected to announce cuts to public spending and tax increases for higher rate taxpayers in her upcoming Budget. Prime Minister Keir Starmer has warned of more “unpopular decisions” to come, following the unexpected removal of the winter fuel allowance for most pensioners in July.
Reeves has welcomed the latest GDP figures, emphasizing the government’s commitment to economic growth as a top priority. She stated that while change may not happen overnight, the government is dedicated to delivering on its promise of progress.
Looking ahead, Reeves and Starmer have both cautioned that tough decisions lie ahead in the Budget. The economy, while showing signs of recovery, still faces challenges following the lockdowns and restrictions imposed over the past two years. ONS Director Liz McKeown noted that while most sectors saw growth in August, the overall pace of growth has slowed compared to earlier in the year.
The services sector was a key driver of growth, with a 0.1 percent increase in August. The production sector also saw growth after a contraction in July, while construction output showed positive signs of recovery. The Bank of England is expected to consider another interest rate cut in November, although positive GDP figures may influence this decision.
Overall, economists remain cautiously optimistic about the economy’s performance. Luke Bartholomew, deputy chief economist at Abrdn, highlighted the impact of speculation surrounding the upcoming Budget on economic activity. Despite concerns about a potential slowdown, recent figures indicate a reassuring rebound in output.
The government is also set to host a business summit in London to attract foreign direct investment into the UK. These developments come amidst ongoing efforts to bolster economic recovery and strengthen the country’s financial outlook. Can you please rewrite this?
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