RSM economist Thomas Pugh says the UK economy likely contracted 0.1% in August
as some of June–July’s strong momentum faded. He says the economy has averaged
about 0.5% growth per quarter year‑to‑date and that Q3 is still expected to
expand roughly 0.4–0.5%. Industrial output was likely flat in August while
construction and services output fell; AI adoption could boost IT and other key
sectors. Pugh warns that rising inflation, higher interest rates and a weakening
labor market could prompt a pronounced slowdown in Q4 and into 2027, leaving
firms to contend with weaker demand.
