According to the Office for National Statistics (ONS), the rebound was primarily driven by a 0.7% expansion in the manufacturing industry, which reversed a significant fall in July, along with a strong performance by the health sector. However, the services sector, which accounts for three-quarters of the economy, flatlined for a second consecutive month.

The construction sector also contracted by 0.3%, as a fall in repair and maintenance work offset growth in new building projects.

The August figures were dampened by the ONS revising July’s performance down from flat to a 0.1% contraction. This revision limited growth over the three months to August to just 0.3%, reinforcing what economists describe as a “sluggish” and “fragile” recovery. One expert suggested the economy appears to have “come to a standstill”.

The outlook is creating a difficult balancing act for policymakers. The Chancellor is facing a £20bn-£30bn spending gap and is reportedly considering tax rises to close it. Sluggish growth reduces tax receipts, limiting her scope for stimulus and increasing the pressure on her budget, scheduled for 26 November. The Treasury is expected to focus on targeted incentives for investment and green technology while maintaining strict borrowing discipline.

Meanwhile, the Bank of England faces its own dilemma. While the UK is on track to be the second-fastest growing G7 economy this year according to the IMF, it is also forecast to have the highest inflation in the group into 2026. This weak growth puts pressure on the bank to consider cutting interest rates, but persistent inflation makes it likely to keep rates on hold in November, with cuts anticipated next year.

For many households, any recovery feels distant. Experts note that rising living costs and higher borrowing rates continue to squeeze disposable incomes. As Kevin Brown, savings expert at Scottish Friendly, commented, families need to see growth “translate into lower inflation and greater financial stability before they can feel the benefits in their day-to-day lives”.