UK services growth hits six-month high, boosting Burnham before budget

AI digestMimile.ai EditorialAugust 21, 2026 at 07:33 PM

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UK services growth hits six-month high, boosting Burnham before budget

Britain's services sector recorded its fastest growth in six months in August, with the S&P Global Purchasing Managers' Index rising to 52.8 from 52.1 in July. Consumer confidence hit a two-year high, and retail sales volumes continued an upward trend. The stronger-than-expected data provides an early boost for Prime Minister Andy Burnham and finance minister John Healey ahead of the October budget.

Key Facts

The S&P Global UK services PMI rose to 52.8 in August, its highest level in six months and above all forecasts in a Reuters poll.
GfK's consumer confidence index climbed to -14 in August from -17 in July, reaching a two-year high.
Britain's economy expanded by 0.3% in June and 0.4% in the second quarter, led by the services sector.
The Confederation of British Industry's manufacturing order books gauge rose to its highest since November 2024, boosted by the strongest export orders in four years.

Business Sentiment

The S&P Global Purchasing Managers' Index for the services sector rose to 52.8 in August from 52.1 in July, exceeding all forecasts in a Reuters poll of economists. The Confederation of British Industry's gauge of monthly manufacturing order books climbed to its highest level since November 2024. Export orders reached their strongest level in four years, according to the CBI survey. The Office for National Statistics noted strong investment in tech equipment and growth in industries associated with the AI boom.

Consumer Confidence

Market research firm GfK reported its consumer confidence index rose to -14 in August from -17 in July. GfK's gauge of major purchase sentiment increased to its highest level since December 2021. Surveys from YouGov/Cebr, BRC-Opinium, Barclays and LSEG/Ipsos all showed an improving mood among British households over the last month. Retail sales volumes remained on a clear upward trend, according to the Reuters report.

Economic Growth

Britain's economy expanded by 0.3% in June and 0.4% over the second quarter, led by the services sector. The UK was on track for the fastest growth among the Group of Seven advanced economies in the first half of 2026. Thomas Pugh, chief economist at RSM, said Britain might have to start talking about a reasonable economic performance this year. Economists cautioned that the strong growth may reflect inadequate seasonal adjustment, which could drag on the second half of the year.

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UK services growth hits six-month high, boosting Burnham before budget

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Finance

UK petrol prices rose 22% between February 25 and August 11, squeezing poorest households

UK annual inflation slowed to 2.8% in June from 3.0% in May, but the Bank of England expects it to climb further in the second half of the year as the US-Israel war on Iran drives up energy costs. Petrol and diesel prices rose 22% and 27% respectively between February 25 and August 11, according to the RAC Foundation. The lowest-income 20% of households spend £407 a week on average, compared with £1,084 for the richest 20%.

Finance

UK posts £1.8bn July deficit as spending rises

Britain's government recorded an unexpected £1.8 billion budget deficit in July, the Office for National Statistics said on Aug 21. Higher social benefits spending of £2 billion offset record self-assessed income tax receipts. Borrowing in the first four months of 2026/27 reached £56.7 billion, £2.3 billion above the Office for Budget Responsibility forecast.

Business

UK productivity shows sustained improvement, economists say

Britain's economic productivity is showing signs of sustained improvement, economists said on Monday, potentially ending a prolonged slump that began around the 2008 financial crisis. The Resolution Foundation estimates annual growth in output per hour averaged 1.1% over the two years to June 2026, up from a 0.7% annual decline in the prior two years. The improvement may ease fiscal pressures from an ageing population and higher defence spending, even as the role of AI in the pickup remains debated.

Politics

UK PM Burnham urges bolder EU ties ahead of summit

British Prime Minister Andy Burnham told European Council President Antonio Costa that London should be bolder in pursuing closer ties with the European Union, his office said on Monday. Burnham met Costa late on Sunday while travelling to Kyiv to co-chair a meeting of the Coalition of the Willing. The two leaders agreed the UK-EU summit later this year would offer a good platform to continue that work.

UK services growth hits six-month high, boosting Burnham before budget

Key Facts

Business Sentiment

Consumer Confidence

Economic Growth

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