UK Economy Rebounds In August In Boost To New Govt

Britain's economy bounced back in August, official data showed Friday, boosting the new Labour government ahead of its maiden budget later in October.

Gross domestic product grew 0.2 percent in the reported month compared with July, when output stalled, the Office for National Statistics said in a statement.

The rise in economic growth was in line with analysts' expectations after GDP flatlined in June and July.

It also provides a timely boost to the new government, which has put growth expansion at the top of its priority list.

"It's welcome news that growth has returned to the economy," said finance minister Rachel Reeves, who will present the budget on October 30.

Prime Minister Keir Starmer's Labour party won power at the start of July, ending 14 years of Conservative rule.

ONS director of economic statistics Liz McKeown said that while all the main sectors of the economy grew in August, "the broader picture is one of slowing growth in recent months, compared to the first half of the year."

Revised official growth data revealed last month that Britain's economy grew less than initially estimated in the second quarter.

Britain's economy had grown 0.7 percent in the first quarter following a shallow and short-lived recession in the second half of last year.

The uptick in economic growth in August has lent some support to expectations that "a mild slowdown in GDP growth in the second half of this year is more likely than another recession," said Ashley Webb, UK economist at research group Capital Economics.

Recent data has also showed Britain's state debt rising to 100 percent of annual GDP -- increasing the likelihood of biting tax rises in Labour's budget, according to analysts.

"The gloom surrounding the economy has been hard to shake", said Lindsay James, investment strategist at Quilter Investors.

"Much of this is due to Labour's rhetoric as they attribute difficult tax and spending decisions to their predecessors," she added.

Reeves has pledged to impose "iron discipline" over public finances to claw back what she says is a GBP22-billion ($29-billion) black hole inherited from the previous Conservative government.

Starmer has warned Britons that the budget announcement will be "painful", with tax rises and spending cuts expected.

The government has already faced criticism from all sides over scrapping a winter fuel-benefit scheme for 10 million pensioners.