Gross National Product (GDP) was up by 2.1 percent during the month, according to data from the Office for National Statistics (ONS). It was the fourth consecutive month of growth, after the economy took a serious hit during the depths of the Covid-19 pandemic. But it is less than half of what experts had expected, and a major slowdown since July.
Analysts expected that GDP would increase by 4.6 percent, according to a consensus taken by Pantheon Macroeconomics.
In July, GDP was up by 6.4 percent, and in June it rose by 9.1 percent, according to ONS data.
The Government invested hundreds of millions of pounds to get the economy back on its feet in August, including promising to pay for half a restaurant bill during parts of the month.
ONS deputy national statistician for economic statistics Jonathan Athow said: “The economy continued to recover in August but by less than in recent months.
“There was strong growth in restaurants and accommodation due to the easing of lockdown rules, the Eat Out To Help Out scheme, and people choosing summer ‘staycations’.
He added: “However, many other parts of the service sector recorded muted growth.
“Construction also continued its recovery, with a significant boost from housebuilding.
“There was limited growth in manufacturing, which remains down on its pre-pandemic level, with car and aircraft production still much lower than the start of the year.”
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FTSE 100 LIVE: UK economy grew but not as much as predicted
5.00pm update: FTSE-100 closes up
The FTSE-100 index at the close was up 38.62 at 6016.65.
The FTSE Mid-250 index closed up 128.26 at 18074.42.
4.25pm update: Eurozone bond yields dip
Eurozone yields fell on Friday as investors remained cautious.
Mizuho analysts said the resilience of the bond market was “another sign that the momentum behind further risk-on is waning.”
3.30pm update: Pakistan blocks app TikTok
Pakistan’s telecom regulator blocked TikTok on Friday.
They said the decision was due to the app failing to filter out “immoral and indecent” content.
It was another blow to the social media app that has come under increasing scrutiny as its popularity has surged across the globe.
TikTok said it was “committed to following the law in markets where the app is offered”.
“We have been in regular communication with the PTA and continue to work with them. We are hopeful to reach a conclusion that helps us continue to serve the country’s vibrant and creative online community,” it said.
2.45pm update: FTSE-100 up
The FTSE-100 index at 2:45pm was up 48.20 at 6026.23.
1.45pm update: Norwegian union says oil strike could end on Friday
Norwegian oil workers could end their 10-day strike on Friday.
It depends on whether a set of new proposals from the oil industry proves satisfactory, the head of the Lederne trade union told Reuters.
“We are getting a new proposal from the NOG, and I hope that we can have a deal today,” Lederne leader Audun Ingvartsen told Reuters.
He did not disclose the contents of the proposal, which he said would take some time to review.
Coronavirus has sent shockwaves through the UK economy
12.15pm update: Expert comments on GDP update
Neil Shah, Head of Research at leading investor relations and research consultancy Edison Group, said: “While today’s data confirms the rebound in economic activity continued through to August, the potential for more localised restrictions and the end of Government sponsored measures increases the growing fears over whether the recovery can be sustained into the final quarter.
“August’s data clearly reflects a boost from Government stimulus and the re-opening of different sectors rather than signalling the hoped for ‘V shaped’ recovery.
“Going forward, the Chancellor will have to take more action, particularly looking at new ways to support SMEs and the expansion of a QE programme to ensure the UK’s recovery doesn’t run out of steam.”
11.45am update: FTSE-100 up
The FTSE-100 index at 11:45am was up 32.67 at 6010.70.
10.20am update: Bright morning for European markets
It has been a positive start to the day for European markets.
Like FTSE, which is up 0.57%, Euronext 100, CAC 40 and the Swiss Market Index are all up.
Euronext is up 0.69%, CAC is up 0.61% and Swiss Market is up 0.30%.
DAX is down 0.18%.
9am update: Currency latest
The pound at 9am was 1.2954 dollars compared to 1.2942 dollars at the previous close.
The euro at 9am was 0.9088 pounds compared to 0.9080 pounds at the previous close.
8:17am update: Rishi Sunak announces new support package
The Chancellor is to announce further support for jobs and businesses affected by coronavirus shutdowns amid calls to help the hardest-hit industries and regions.
Rishi Sunak will detail “the next stage” of the Jobs Support Scheme on Friday, ahead of new restrictions expected for the hospitality sector.
Cities in northern England and other areas suffering a surge in Covid-19 cases may have pubs and restaurants closed among measures to combat the spread.
A Treasury spokeswoman said: “The Chancellor will be setting out the next stage of the Job Support Scheme later today, that will protect jobs and provide a safety net for those businesses that may have to close in the coming weeks and months.”
8.05am update: FTSE soars on open
FTSE has surged this morning, reversing a pattern of early losses this week.
The UK index closed at 5,978 yesterday and has already risen to 6,006 today.
This marks a rise of 28 points in just five minutes.
7:10am update: UK economic growth
The UK economy grew by 2.1 percent in August as the pace of recovery slowed, the Office for National Statistics has said.