UK business activity reached a 12-month high in August, while Government borrowing came in lower than expected, offering some relief to Chancellor Rachel Reeves ahead of the Autumn Budget.
The S&P Global UK Composite PMI rose to 53 from 51.5 in July. This was the fourth consecutive month above the 50 threshold that signals services-led growth, with new business volumes rising fastest since October 2024. Business expectations also improved, though employment remained weak, with workforce numbers falling for the 11th month.
Regarding public finances, the Office for National Statistics reported borrowing £1.1 billion in July, less than half the £2.1bn forecast by the Office for Budget Responsibility (OBR). Receipts from self assessed income tax rose by £2.7bn, while debt interest costs were lower than predicted. Employer national insurance contributions, raised last October, were up nearly 24% yearly.
Despite July’s improvement, borrowing between April and July totalled £60bn, the third-highest shortfall for this period on record and broadly in line with OBR forecasts. The current budget deficit stood at £42.8bn, £5.7bn above expectations. Public sector net debt reached 96.1% of GDP, its highest level since the 1960s.
GDP growth slowed to 0.3% in the second quarter, down from 0.7% in the first, highlighting the economy’s uneven performance. Meanwhile, youth unemployment ticked up, with almost 950,000 16—to 24-year-olds not in education, employment, or training.
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