The UK economy grew slightly in August helped by an increase in manufacturing output, according to the latest official figures.

The economy expanded by 0.1%, the Office for National Statistics said, after contracting by 0.1% in July.

The government has made boosting the economy a key priority and pressure is mounting ahead of the Budget next month, but economists expect growth to remain sluggish over the next few months.

Many analysts expect that tax rises or spending cuts will be needed to meet the chancellor’s self-imposed borrowing rules.

The Institute for Fiscal Studies is projecting Rachel Reeves will need to find £22bn to make up a shortfall in the government’s finances, and will “almost certainly” have to raise taxes.

On Wednesday, Reeves said she was “looking at further measures on tax and spending, to make sure that the public finances always add up”.

The main driver of growth in August was the manufacturing sector, which grew by 0.7%.

However, the key services sector – which covers businesses in sectors such as retail, hospitality and finance – saw no growth during August.

Monthly growth figures can be volatile, and the ONS has downgraded July’s figure from its initial estimate of zero growth to a 0.1% contraction.

The ONS is focusing on growth over a rolling three-month period, and in the three months to August the economy expanded by 0.3%, which was a slight improvement on the previous figure.

“Economic growth increased slightly in the latest three months. Services growth held steady, while there was a smaller drag from production than previously,” said Liz McKeown, ONS director of statistics.

Yael Selfin, chief economist at KPMG UK, said that while the economy had returned to growth in August, the “outlook remains weak”.

She said households were facing higher costs for essentials such as food, while uncertainty about potential tax rises in the Budget was “expected to weigh on activity for both households and businesses”.

“As a result, we anticipate growth to remain sluggish over the coming months.”

Ruth Gregory, deputy chief UK economist at Capital Economics, called August’s growth “meagre”.

She said the increases in taxes for businesses that took effect in April this year – such as the rise in employers’ National Insurance contributions – were “undoubtedly playing a part in restraining growth”.

“There is little reason to think GDP growth will accelerate much from here,” Ms Gregory said.

“The disruption to the auto sector caused by the Jaguar Land Rover cyber-attack probably meant the economy went backwards in September.”

Earlier this week, the International Monetary Fund (IMF) predicted that the UK would be the second-fastest-growing of the world’s most advanced economies this year.

However, it also said the UK would face the highest rate of inflation among G7 nations both this year and next, as result of rising energy and utility bills.

A Treasury spokesperson said: “We have seen the fastest growth in the G7 since the start of the year, but for too many people our economy feels stuck.

“The chancellor is determined to turn this around by helping businesses in every town and high street grow, investing in infrastructure and cutting red tape to get Britain building.”

Shadow chancellor Mel Stride said the latest figures “show that growth continues to be weak and Rachel Reeves is now admitting she is going to hike taxes yet again, despite all her promises”.

“If Labour had a plan – or a backbone – they would get spending under control, cut the deficit and get taxes down.”

Daisy Cooper, Liberal Democrat Treasury spokesperson, said the government was “simply not doing enough to kickstart growth”.

“The chancellor must quit her slowcoach approach to the economy and finally drop her damaging national insurance hike, which has stifled business and hit high streets up and down the country.”

Asian markets edged higher on Thursday as investors weighed escalating tensions in the US-China trade war alongside expectations that the Federal Reserve will continue cutting interest rates this year.The region’s gains follow a broadly positive session on Wall Street and mark a second consecutive day of recovery, as traders focused on softer US economic data and central bank signals that may favour further monetary easing.

Trump reignites trade war fears

Markets have been volatile this week after US President Donald Trump threatened 100% tariffs on Chinese goods in retaliation for Beijing’s new rare-earth export controls.When asked about the possibility of a prolonged trade conflict, Trump bluntly told reporters, “Well, you’re in one now… We have a 100 percent tariff. If we didn’t have tariffs, we would be exposed as being a nothing.”Despite the hawkish tone, treasury secretary Scott Bessent suggested a more conciliatory approach, proposing a potential extension of the tariff truce if Beijing delays its rare-earth restrictions.Trump still plans to meet Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation summit in South Korea later this month.

Fed rate cut expectations support markets

Investors were also encouraged by data from the Fed’s “Beige Book” survey, which pointed to a softer US job market, echoing other recent weak economic indicators. Fed chair Jerome Powell had warned earlier this week that “the downside risks to employment appear to have risen,” reinforcing market bets on additional rate cuts.Economists, however, remain cautious. Bank of America noted that uncertainties persist over trade, inflation, growth, and US policy, including healthcare and drug pricing.

Safe-haven assets climb

The combination of trade war jitters, rate cut expectations, and a weaker dollar pushed gold to new daily records, reaching $4,234.70 on Thursday.

Key market figures

Markets in Sydney, Seoul, Wellington, Taipei, and Manila also posted gains as traders balanced geopolitical risks with hopes for accommodative US monetary policy.

Indian Railways is expected to roll out the Vande Bharat Sleeper for the public very soon. The Vande Bharat Sleeper is fitted with amenities that redefines the luxury of long distance travel for common people. While Indian Railways’ passengers eagerly await the Vande Bharat Sleeper launch, the public transporter has unveiled the prototype of the latest luxurious interior, which will replace the modern Vande Bharat Sleeper.

The upcoming Vande Bharat Sleeper trains will introduce redesigned upper berths aimed at making long-distance travel more comfortable and accessible for passengers of all age groups, a government official said on Wednesday. Nishank Garg, Director of the Vande Bharat Project at Kinet—the joint venture overseeing the trains’ development—told IANS that extensive passenger feedback guided the redesign process.

Delhi: At IREE 2025, Kinet, a Russian-Indian joint venture for electric trains, unveiled a full-scale mock-up of the Vande Bharat high-speed train sleeper coach, showcasing its first-class coach design concept for the first time pic.twitter.com/dPQX5VaFmu
— IANS (@ians_india) October 15, 2025

“Many passengers feel the upper berth is uncomfortable and difficult to reach. We took this feedback seriously while designing the new Vande Bharat Sleeper,” Garg said. He added that the ladder to the upper berth has been re-engineered for ease of use, making it more convenient and safer. “This feature will be included in the very first train, which we plan to deliver next year. Work is progressing rapidly,” he added.

Evgeny Maslov, Chief Designer of the project at Kinet, said the design represents a step forward in redefining comfort in Indian rail travel. “Our aim is to offer a next-level travel experience. Vande Bharat is a landmark initiative for India, and this is our vision for its future,” Maslov said.

Kinet Railway Solutions—a partnership between Russia’s Transmashholding, the country’s largest rolling stock manufacturer, and India’s Rail Vikas Nigam Limited (RVNL)—has been contracted to design and produce 1,920 sleeper coaches (120 trainsets) for the Vande Bharat project. The joint venture will also maintain the coaches for the next 35 years.

Railway Minister Ashwini Vaishnaw highlighted India’s progress in railway modernisation under Prime Minister Narendra Modi’s leadership, noting that 35,000 kilometres of new track have been laid, 46,000 kilometres electrified, and 40,000 new coaches manufactured over the past 11 years.

He said the transformation reflects the government’s sustained focus on upgrading India’s railway infrastructure and passenger experience.