UK economic growth stalls in August, but improves 0.7% over the quarter

The UK’s economy was stagnant in August, the latest figures revealed this morning.

Statistics from the Office for National Statistics (ONS) showed the economy flatlined during August, but grew 0.7% over the quarter.

Zero growth in August followed a 0.4% rise in GDP (gross domestic product) in July, which was revised up from a previous estimate of 0.3%.

Growth in June was also revised up, to 0.2% from 0.1%.

The 0% forecast for August was contrary to expectations, which had predicted a 0.1% increase.

On a rolling three month basis, prospects looked better, with growth in the three months to August unchanged at 0.7%.

This was after growth in the three months to July was revised up from 0.6%.

Retail, food and drink were hot spots during the heatwave.

Rob Kent-Smith, head of GDP from the ONS, said: “The economy continued to rebound strongly after a weak spring with retail, food and drink production and housebuilding all performing particularly well during the hot summer months.

“However, long term growth continues to lag behind its historical trend.

“A large drop in imports of non-monetary gold, alongside a jump in oil exports, helped narrow our trade deficit with the world.”

The International Monetary Fund has downgraded UK growth forecasts for this year.

The global lender expects a growth rate of 1.1%, down from 1.3%, as Brexit uncertainty weighs more heavily on trade and investment.

Jacob Deppe, head of trading at the online trading platform, Infinox, said: “The flat August growth figure will be a shot across the bows for the Government as we enter the home straight of Brexit.

“After the IMF downgrade, it’s a double body blow for those leading the Brexit negotiations.

“The economy hasn’t given up the fight, but it’s by no means firing on all cylinders.

“It’s somewhere in between, and that will add to the uncertainty surrounding our exit from the EU.”

He added: “Optimists will see the August flatline as mere seasonal fall-out, cynics will see it as symbolic of a deeper malaise.

“What few will deny is that the disproportionate contribution of the services sector leaves the UK very exposed in the event of a fractious Brexit.

“If consumers sit tight, the rate of growth could quickly contract, all the more so if the Pound weakens further and drives up inflation.”

He predicted: “We are in for a fraught fourth quarter.”