The Office for National Statistics (ONS) today reported that the UK economy returned to growth modestly by 0.1% in August 2025. This increase comes on the heels of a revised 0.1% contraction in July. That modest increase is a testament to the strength and resilience of our economy to weather multiple storms. These are the sort of figures that the Chancellor will be looking at as he gears up for the next Autumn Budget. He is deeply conscious of the economic climate, which is failing to catch fire.
Hidden within the mixed data were clues as to what had happened. The production sectors contributed strongly, rising by 0.4% in August. The services sector, which makes up more than three quarters of the UK economy, recorded flat growth over the same quarter. Construction faced setbacks, contracting by 0.3%. This mixed bag reflects the balancing act the economy must perform as it continues to adjust its sails in the stormy seas of multiple economic headwinds.
International trade also presented challenges in August. Exports of goods to the United States dropped sharply (£0.7 billion), widening a record trade deficit. The overall goods and services trade deficit jumped by £1.7 billion. It is now at £5.2 billion for the three months to August. Additionally, total exports fell faster than imports over this period, suggesting an even more pernicious story for Britain’s trade balance.
Goods exports decreased by £1.1 billion or 3.3% just in August. Imports However, both exports to EU countries and non-EU countries decreased, emphasizing a wider difficulty that the UK is facing amongst its international trade partnerships. Below is the reaction from Samuel Edwards, Head of Dealing at Ebury, the global financial services firm, to these significant developments. He pointed out that the data indicates a very difficult environment for exporters.
The new July numbers reflect a contraction instead of the lack of growth first reported. This baffling change erodes confidence that we’re on a sustainable economic trajectory. With just a few weeks until the Autumn Budget, the Chancellor is increasingly angling for an output boost. So he needs to find ways to spur growth and address the widening trade deficit.