UK GDP Edges Higher But Growth Stays Stuck in Low Gear
- GDP expands 0.3% in three months to August, matching forecasts - Services stagnate, construction and manufacturing constrained - Trade deficit widens as exports slide faster than imports - Economists warn of pre-Budget drag and weak sentiment into Q4 - BoE policymakers expected to keep rates unchanged in November
LONDON - Britain’s economic activity remained anaemic in mid-summer, with services stagnant for a second consecutive month and output across key sectors showing only patchy improvement.
Data from the Office for National Statistics showed GDP expanded 0.3% in the three months to August, in line with expectations.
That marks an improvement on the 0.2% growth seen in the three months to July and stronger than the flat performance in the three months to May.
Statisticians reported a 0.4% rise in services productivity versus May, though there was no change compared with July. Production fell 0.3% on a three-month basis, following a steeper revised 1.4% decline in July. Construction output increased 0.3% over the same period, slower than July’s 0.5%.
Liz McKeown, ONS director of economic statistics, said “continued strength in business rental and leasing and healthcare were the main contributors to services growth, partially offset by weakness in some consumer-facing services, while wholesalers also fared poorly.”
Monthly output shows little momentum
The monthly GDP rate rose a modest 0.1% in August, in line with forecasts and reversing July’s downwardly revised 0.1% fall.
By sector, production grew 0.4% m/m, services were unchanged, and construction slipped 0.3%.
Sanjay Raja, Deutsche Bank’s chief UK economist, said both services and construction “hit a pre-Budget funk, likely dampening discretionary household and business spending.”
Trade deficit widens as exports falter
Trade data released alongside the GDP figures showed the total goods and services deficit widened by GBP 1.7bn to GBP 5.2bn in the three months to August, as exports fell by more than imports.
According to the ONS, the trade in goods deficit widened by GBP 3.0bn to GBP 58.4bn, while the trade in services surplus increased by GBP 1.3bn to GBP 53.2bn.
“We expect some turbulence to continue as we approach year-end,” said Raja. “Indeed, the UK economy has yet to see the full ramifications of the US trade war.”
Economists see little upside ahead
Ruth Gregory, deputy chief UK economist at Capital Economics, said weak overseas demand continued to weigh on growth. She noted that the 0.7% m/m rebound in manufacturing output only partly offset July’s 1.1% fall, leaving the three-month rate flat.
“There is little reason to think GDP growth will accelerate much from here,” she added. “The disruption to the auto sector caused by the Jaguar Land Rover cyberattack probably meant the economy went backwards in September. Sentiment remains weak, and taxes may rise by a further GBP 27bn in the Budget on 26 November. But with inflation still high and rising, we doubt the soft GDP news will tempt the Bank of England to cut interest rates again this year.”
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- GDP expands 0.3% in three months to August, matching forecasts
- Services stagnate, construction and manufacturing constrained
- Trade deficit widens as exports slide faster than imports
- Economists warn of pre-Budget drag and weak sentiment into Q4
- BoE policymakers expected to keep rates unchanged in November
By Harry Daniels
LiveSquawk News
@HarryDaniels71
16 October 2025 | 11:00 BST
LONDON - Britain’s economic activity remained anaemic in mid-summer, with services stagnant for a second consecutive month and output across key sectors showing only patchy improvement.
Data from the Office for National Statistics showed GDP expanded 0.3% in the three months to August, in line with expectations.
That marks an improvement on the 0.2% growth seen in the three months to July and stronger than the flat performance in the three months to May.
Statisticians reported a 0.4% rise in services productivity versus May, though there was no change compared with July. Production fell 0.3% on a three-month basis, following a steeper revised 1.4% decline in July. Construction output increased 0.3% over the same period, slower than July’s 0.5%.
Liz McKeown, ONS director of economic statistics, said “continued strength in business rental and leasing and healthcare were the main contributors to services growth, partially offset by weakness in some consumer-facing services, while wholesalers also fared poorly.”
The monthly GDP rate rose a modest 0.1% in August, in line with forecasts and reversing July’s downwardly revised 0.1% fall.
By sector, production grew 0.4% m/m, services were unchanged, and construction slipped 0.3%.
Sanjay Raja, Deutsche Bank’s chief UK economist, said both services and construction “hit a pre-Budget funk, likely dampening discretionary household and business spending.”
Trade data released alongside the GDP figures showed the total goods and services deficit widened by GBP 1.7bn to GBP 5.2bn in the three months to August, as exports fell by more than imports.
According to the ONS, the trade in goods deficit widened by GBP 3.0bn to GBP 58.4bn, while the trade in services surplus increased by GBP 1.3bn to GBP 53.2bn.
“We expect some turbulence to continue as we approach year-end,” said Raja. “Indeed, the UK economy has yet to see the full ramifications of the US trade war.”
Ruth Gregory, deputy chief UK economist at Capital Economics, said weak overseas demand continued to weigh on growth. She noted that the 0.7% m/m rebound in manufacturing output only partly offset July’s 1.1% fall, leaving the three-month rate flat.
“There is little reason to think GDP growth will accelerate much from here,” she added. “The disruption to the auto sector caused by the Jaguar Land Rover cyberattack probably meant the economy went backwards in September. Sentiment remains weak, and taxes may rise by a further GBP 27bn in the Budget on 26 November. But with inflation still high and rising, we doubt the soft GDP news will tempt the Bank of England to cut interest rates again this year.”