UK economy sees modest growth ahead of crucial budget
The UK’s GDP grew in the three months to August 2025, data published by the ONS on Thursday (16 October) shows.
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.
The monthly GDP is estimated to have grown by 0.1% in August 2025, following a fall of 0.1% in July 2025 and a growth of 0.4% in June 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).
“Economic growth increased slightly in the latest three months. Services growth held steady, while there was a smaller drag from production than previously,” said ONS Director of Economic Statistics Liz McKeown.
“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 figures are likely to be welcomed by Chancellor Rachel Reeves ahead of her crucial budget next month, but there may still be questions as to whether the economy should be growing at a faster rate.
She faces a delicate balancing act in addressing the fiscal deficit while still keeping unemployment in check and the economy growing.
The number of payrolled employees has continued to drop in the UK, data published on Tuesday (14 October) showed. The unemployment rate climbed to 4.8% in the three months to August, according to the Office for National Statistics (ONS), which was the highest since the March-May period in 2021. The revised estimate of payrolled workers in August 2025 shows an increase of 10,000 from July, though provisional estimates show a decrease of 10,000 for September.
In the three months to September 2025, vacancies in the UK fell by 9,000 (1.3%) to 717,000. This is the 39th consecutive period where vacancy numbers have dropped compared with the previous three months.
Average weekly earnings in the three months to August 2025 were up 4.7% on the year, excluding bonuses, down slightly from 4.8% last month. Including bonuses, the rate was 5%, up from last month’s figure of 4.8%.
