Rachel Reeves has will be letting out a sigh of relief following Thursday morning’s GDP announcement, but one big problem remains. Data from the Office of National Statistics (ONS) shows that the UK economy grew by 0.1% in August.
Gross domestic product (GDP), the main estimate of UK economic growth based on the value of goods and services produced during a given period also grew by 0.3% in the three months to August 2025 compared with the three months to May 2025. The rise represents a slight increase following growth of 0.2% in the three months to July 2025. However production output fell by 0.3% in the three months to August 2025, compared with the three months to May 2025.
It provides the Chancellor with a small amount of comfort following a week where the International Monetary Fund (IMF) warned UK inflation is set to surge to the highest in the G7 in 2025 and 2026.
Reeves was in Washington yesterday where she is believed to have championed Britain as a place where investors and businesses can count on economic stability during meetings at the IMF and the World Bank.
Ahead of the journey, Ms Reeves said: “Our Plan for Change is delivering national renewal built on the rock of economic stability – the foundation for more security, more respect and more opportunity for every part of the UK.
“In Washington I will showcase Britain’s commitment to fiscal responsibility – while creating the conditions to boost productivity, attract investment and secure our place as a strong and credible partner in a stable global economy.”
On Tuesday, the IMF said it expects UK inflation to average at 3.4% in 2025, increasing from its previous prediction of 3.2%.
The forecasts also showed that UK inflation is expected to slow slightly to 2.5% next year, but this is nonetheless above the 2.3% prediction from earlier this year.
It means UK households are therefore expected to face the highest rate of price inflation across all the G7 group of advanced economies over the two years.
Meanwhile, the UK economy is expected to grow by 1.3% this year, after being boosted by strong growth in the first half.
It represents an improvement against the previous IMF forecast of 1.2%.
However, the IMF has now cut its growth prediction for next year from 1.4% to 1.3% as global trade pressures threaten to impact on many economies.
The main points published by the Office of National Statistics state:
- Real gross domestic product (GDP) grew by 0.3% in the three months to August 2025 compared with the three months to May 2025, a slight increase following growth of 0.2% in the three months to July 2025.
- Services output grew by 0.4% in the three months to August 2025, compared with the three months to May 2025; this is unchanged after also growing by 0.4% in the three months to July 2025.
- Production output fell by 0.3% in the three months to August 2025, compared with the three months to May 2025; this is a smaller decrease than in the three months to July 2025, when it fell by 1.4% (revised down from a fall of 1.3% in our previous publication).
- Construction output increased by 0.3% in the three months to August 2025, compared with the three months to May 2025, a smaller increase than the growth of 0.5% in the three months to July 2025 (revised down from 0.6% in our previous publication).
- Monthly GDP is estimated to have grown by 0.1% in August 2025, following a fall of 0.1% in July 2025 (revised down from no growth in our previous bulletin) and a growth of 0.4% in June 2025.
- Production grew by 0.4% in August 2025, whereas services showed no growth and construction fell by 0.3% in August.