Modest Growth in UK Economy: August 2025

The United Kingdom’s economy posted slight growth in August 2025, with monthly real GDP rising by 0.1%, in line with market expectations. The improvement followed a 0.1% decline in July, suggesting that while momentum remains fragile, the economy has managed to avoid a deeper slowdown.

Production Sector Drives Recovery

Growth was primarily supported by gains in the production sector, particularly in manufacturing and energy-related industries. Industrial output expanded by 0.4%, rebounding from a similar contraction in the previous month.

• Manufacturing rose by 0.7%, led by increased production in energy-intensive sectors.
• Electricity, gas, steam, and air conditioning supply climbed 0.4%.
• Water supply and waste management advanced 0.3%.
• Mining and quarrying, however, dropped sharply by 2.3%, offsetting some of the broader industrial gains.

Economists noted that the production rebound reflects resilience in core industries, although output levels remain below pre-pandemic averages.

Services Sector Stagnates

The services sector, which accounts for nearly 80% of the UK economy, recorded no growth for the second consecutive month. While administrative and support services rose 1.0%, and healthcare grew 0.4%, these gains were neutralized by declines in:

• Retail trade
• Entertainment and recreation
• Transport and storage

Consumer-facing services remain under pressure as high living costs and cautious household spending continue to weigh on activity. Analysts suggest that weak consumer confidence remains a key obstacle to sustained recovery.

Construction Weakens

Construction output slipped 0.3% in August, largely due to a 1.5% fall in repair and maintenance work. Industry analysts point to rising material costs and project delays as ongoing challenges for builders and developers.

Overall

Overall, August’s data confirms that the UK economy is treading a fine line between stagnation and slow recovery. Economists expect the government’s November budget to prioritize measures that boost productivity and private investment.

Despite easing inflation, persistent cost pressures and soft consumer demand are likely to keep growth uneven through the rest of the year. For now, the modest expansion offers a brief respite, but not yet a sign of sustained momentum.