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Market Analysis

The British economy resumed expanding ahead of the yearly budget
Amos Simanungkalit · 29.2K Views

15

Britain's economy experienced growth in August, following two consecutive months of stagnation, offering some relief to Finance Minister Rachel Reeves ahead of the Labour government's upcoming first budget.

According to data from the Office for National Statistics (ONS), the country's economic output rose by 0.2% in August, aligning with expectations from a Reuters poll of economists.

"This will provide timely support for the chancellor amidst increasing spending pressures," commented Yael Selfin, chief economist at KPMG UK.

Reeves welcomed the positive figures on Friday, stating that economic growth remains a top priority for the government.

The latest data suggests that Britain is on course for a third consecutive quarter of economic expansion. The ONS noted that September’s GDP figures would need to show a decline of 0.3% to 0.6% month-on-month for the quarter's growth to be flat, assuming no revisions to prior data.

Following the release of the ONS report, the British pound showed little change against the U.S. dollar. However, investor sentiment leaned further towards a potential quarter-point rate cut by the Bank of England in November.

The ONS left its estimates for economic performance in July and June unchanged, confirming stagnation during both months. However, it revised its growth figures for April and May downward to -0.1% and +0.2%, respectively, from the previously reported 0.0% and +0.4%.

The Bank of England anticipates a slight slowdown in growth, projecting 0.4% for the third quarter and 0.2% for the last quarter of the year, closer to the underlying growth rate of the economy.

Year-on-year, Britain's economic output was 1.0% higher, falling short of the 1.4% growth forecast by economists due to downward revisions of previous months.

Prime Minister Keir Starmer is set to host an international investment summit on October 14, with the aim of increasing foreign direct investment to support economic growth—one of his key objectives since taking office in July.

 

 

 

 

 

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author.

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