The UK economy grew slightly in August, helped by rising industrial production, according to the latest official data.
The economy grew 0.1% after contracting 0.1% in July, according to the Office for National Statistics.
The government has made stimulating the economy a key priority and pressure is mounting ahead of next month's budget.
Many economists warn that tax rises or spending cuts will be required to comply with the Chancellor's voluntary borrowing rules.
Institute for Fiscal Studies designs Rachel Reeves will need to find £22 billion to plug the public finance gap, he will “almost certainly” have to raise taxes.
On Wednesday, Reeves said she was “considering further tax and spending measures to ensure that public finances always increase.”
[BBC]
The main driver of growth in August was the manufacturing sector, which grew by 0.7%.
However, monthly growth figures can be volatile and the ONS cut the July figure from its original estimate of zero growth to a contraction of 0.1%.
The ONS focuses on growth over a three-month period and the economy grew 0.3% in the three months to August, a slight improvement on the previous figure.
“Economic growth has increased slightly over the past three months. Services sector growth remained stable, although the fall in manufacturing was smaller than before,” said Liz McKeon, director of statistics at the ONS.
“Continued growth in business rentals and leasing and health care were major contributors to services growth, partially offset by weakness in some consumer services, while wholesalers also performed poorly.”
Yael Selfin, chief economist at KPMG UK, said that while the economy returned to growth in August, “the outlook remains weak.”
She said households were starting to feel the effects of slowing wage growth while still facing higher costs for essentials such as food.
Uncertainty over potential tax hikes in the budget is also expected to “pressure both household and business activity,” she added.
“As a result, we expect growth to remain subdued in the coming months.”
Earlier this week The International Monetary Fund (IMF) predicted that the UK will become the world's second fastest growing economy this year.
However, it also said the UK will face the highest rate of inflation among G7 countries both this year and next due to rising energy and utility bills.
A Treasury spokesman said: “We've seen the fastest growth in the G7 since the start of the year, but too many people feel our economy is stuck.
“The Chancellor is determined to make a difference by helping businesses in every town and high street to grow, investing in infrastructure and cutting red tape to get construction going in Britain.”
Shadow Chancellor Mel Stride said the latest data “shows that economic growth continues to be weak and Rachel Reeves now admits she is going to raise taxes again despite all her promises.”
“If Labor had a plan – or a framework – they would get spending under control, cut the deficit and cut taxes.”
Daisy Cooper, the Liberal Democrat Treasury spokeswoman, said the government was “simply not doing enough to kick-start economic growth”.
“The Chancellor must abandon her slow-moving approach to the economy and finally abandon the devastating National Insurance rises that have stifled businesses and hit high streets across the country.”
