UK economy grows by 0.2 per cent in August

Britain's economy partially recovered in August after a sharp drop in July but the bigger picture remained one of only sluggish growth after last year's surge in inflation and 14 back-to-back interest rate hikes by the Bank of England.

Official data showed economic output grew by a 0.2 per cent in August from July, matching the median forecast in a Reuters poll of economists.

But July's drop, when rainy weather and strikes hit the economy, was estimated to have been bigger than first thought, dropping by 0.6 per cent rather than the initial estimate of 0.5 per cent.

The last time the economy shrank by more than that on a month-on-month basis was in June last year which reflected the impact of a one-off holiday to mark the late Queen Elizabeth's 70 years on the throne.

Nonetheless, August's growth reduces the possibility of a recession starting as early as the July-September period.

The ONS said the economy would need to grow by 0.2 per cent in September to avoid a contraction in the third quarter, excluding other factors.

The data showed Britain's huge services sector grew by a slightly stronger than expected 0.4 per cent in August from July while manufacturing and construction shrank by 0.8 per cent and 0.5 per cent.

(Reuters)