LONDON (Reuters) -Britain’s economy returned to growth in August when it expanded by a marginal 0.1% from July, official data showed on Thursday, offering some relief to finance minister Rachel Reeves as she prepares for her budget speech next month.
However, gross domestic product in July was revised to show a 0.1% fall from June having previously been estimated to have been unchanged, the Office for National Statistics said.
Britain’s economy is on course to have the second-fastest growth among the Group of Seven nations after the United States, the International Monetary Fund said this week.
But at 1.3% its annual pace of expansion is not enough to avoid the need for tax increases in Reeves’ budget.
Economists polled by Reuters before Thursday’s data release had forecast that GDP would expand by 0.1% in August.
In the three months to August, growth picked up slightly to 0.3% from 0.2% in the three months to July, the ONS said.
The Bank of England last month nudged up its third quarter growth forecast to 0.4% from a previous estimate of 0.3%.
BoE policymakers, who held interest rates at 4% in September, are trying to steer their way between stubbornly high inflation and weak growth.
Governor Andrew Bailey said on Tuesday that Britain’s jobs market was softening and inflation pressures were cooling after official data showed unemployment rose to its highest since 2021 and private sector wage growth slowed.
Monetary Policy Committee member Alan Taylor, also speaking on Tuesday, said the British economy risked a “bumpy landing”, partly due to the impact of U.S. President Donald Trump’s trade tariffs.
Data published earlier this week showed weak growth in retail sales, partly reflecting worries about possible tax increases in Reeves’ budget on November 26.
(Writing by William Schomberg and Suban Abdulla; Editing by Muvija M and Kate Holton)
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