The UK economy grew unexpectedly in August 2026, offering a boost to businesses and policymakers ahead of the government’s upcoming Budget.

Official figures published on 15 October showed that gross domestic product (GDP) increased by 0.1% in August, beating economists’ expectations of a 0.1% contraction. Annual growth reached 2.1%, its strongest level since October 2022, according to figures from the Office for National Statistics (ONS).

Computer Programming Emerges as a Growth Driver

Computer programming was the largest contributor to economic growth over the three months to August. The sector expanded by 1.1% during August and was up 13% year to date, highlighting the growing importance of digital services and investment in artificial intelligence.

Manufacturing also recorded a strong month, rising 1.2%, while services activity remained steady. The figures suggest that growth was supported by more than one part of the economy, although performance varied between sectors.

Budget and Interest Rates Remain in Focus

The stronger-than-expected figures give the government a more positive economic backdrop before the Budget. However, high long-term government borrowing costs continue to limit the room for additional spending.

The data could also influence the Bank of England’s assessment of economic momentum and inflation risks as policymakers consider the future path of interest rates.

For UK businesses, the figures point to resilience in technology-related activity, but they do not remove uncertainty around financing costs, demand and future investment.