UK GDP expected to fall in August as services sector slows

Experts say the August GDP figure will show a correction after two months of unexpected growth, with the services sector leading the decline.

By Felo News Desk · Published Sun, 11 Oct 2026 09:28:24 GMT

The Office for National Statistics is set to publish the August GDP estimate on 15 October, and economists expect the figure to show a 0.3% contraction.

What happened

Data for June indicated a 0.3% rise in GDP, driven by hospitality, leisure and a hot summer that boosted football‑related spending. July saw a surprise 0.4% increase, attributed to strong performance in the services industry and heightened demand for artificial‑intelligence and cloud‑computing services. The forthcoming August numbers are projected to reverse that trend.

What the reports add

Both Standard and Independent note that the predicted decline stems from a broad slowdown across the economy, with particular weakness expected in the three “big” service sectors – professional services, administration and information & communication – which together account for roughly 20% of output. They also highlight that manufacturing is expected to be roughly flat for the month, with gains in some factories offset by weakness in the automotive sector.

Thomas Pugh, chief economist at RSM UK, forecast a shallower decline of 0.1% for August.
Pugh warned that rising inflation could push to about 4.5% early next year and that unemployment may climb back above 5%.
He added that the Budget could add uncertainty in Q4 and that growth for the third quarter of 2026 is still expected at 0.4‑0.5%.

What was said

“The ‘big three services’ – which together account for 19.7% of GDP – had a stonking July, with the strongest monthly growth since April 2022. The crucial judgment for August is how much of that surge has unwound.” – Robert Wood, chief UK economist, Pantheon Macroeconomists (Standard)

“The outlook beyond the summer is more difficult. Inflation is likely to rise to around 4.5% early next year, unemployment will probably trend back above 5%, and the Budget may add to uncertainty in Q4. Together, those pressures are likely to slow growth sharply in the final quarter of this year and ensure a slow start to 2027.” – Thomas Pugh, chief economist, RSM UK (Independent)

How it came about

The August outlook follows a summer in which the UK economy benefited from a temporary uplift linked to sporting events and unusually warm weather, as covered in Felo’s earlier report on the June growth surge. Analysts now caution that the earlier gains were not sustainable, and the correction reflects a return to underlying trends in the services sector.

Key facts

Economists forecast a 0.3% decline in UK GDP for August. (standard.co.uk)
June 2026 GDP grew 0.3% and July 2026 grew 0.4%. (independent.co.uk)
The three largest service sectors – professional services, administration and information & communication – are expected to show notable weakness. (standard.co.uk)