Is the Bank of England under pressure to wake the economy from its sleepy summer?
Professor Joe Nellis · Posted on: October 16th 2025 · read
The UK economy appears to have come to a standstill. Revised figures show that growth of 0.1% in August followed a 0.1% contraction in the economy in July. The results underline how fragile the economic recovery remains and sets the stage for key policy decisions by both the Bank of England and the Chancellor ahead of the Autumn Budget.
For the Bank of England, the stagnation presents a difficult balancing act. The latest IMF World Economic Outlook indicates that UK inflation will remain the highest in the G7 into 2026, but weak growth adds pressure to consider when interest rates might begin to fall.
The UK economy appears to have come to a standstill. Revised figures show that growth of 0.1% in August followed a 0.1% contraction in the economy in July. The results underline how fragile the economic recovery remains and sets the stage for key policy decisions by both the Bank of England and the Chancellor ahead of the Autumn Budget.
For the Bank of England, the stagnation presents a difficult balancing act. The latest IMF World Economic Outlook indicates that UK inflation will remain the highest in the G7 into 2026, but weak growth adds pressure to consider when interest rates might begin to fall.
"It is likely that the Autumn Budget will focus on targeted incentives for growth — such as investment, infrastructure, or green technology — while maintaining a firm stance on borrowing discipline to stick to the Chancellor’s self-imposed fiscal rules and reassure the financial markets."
The August GDP results serve as a timely reminder that the UK’s economic recovery remains fragile — and that both fiscal and monetary policymakers face limited room for error in the months ahead.
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