UK Economy Surprises with Strong Growth Ahead of Autumn Budget

Britain's economy has shown surprising signs of strength in recent months, according to a report released on Friday. The services sector, which accounts for the majority of the country's economic activity, recorded its best growth in six months, defying expectations of a slowdown.

The S&P Global Purchasing Managers' Index for the services sector rose to 52.8, up from 52.1 in July and above all forecasts in a Reuters poll of economists. The Confederation of British Industry's gauge of monthly manufacturing order books also rose to its highest level since November 2024, bolstered by the strongest export orders in four years.

Consumer confidence has also been on the rise, with market research firm GfK reporting that its consumer confidence index rose to -14 in August from -17 in July. Other surveys have shown a similar improving mood among British households over the last month.

However, economists are still cautious about the country's economic prospects, citing high inflation and strained public finances as major risks. The government recorded an unexpected budget deficit last month, and borrowing costs could increase further due to concerns about global energy prices rising.