By Matthew Ryan, Head of Market Strategy at international payments company Ebury

The British economy recorded near-zero growth of just 0.1% in August as recent tax rises, higher UK inflation and international turmoil continue to dampen activity.

It is now hard to see how the economy will achieve the Bank of England’s estimate of growth of 0.4% in the third quarter — a forecast that looks increasingly optimistic, especially as uncertainty surrounding the fall budget likely held back growth in September as well.

However, it’s not all doom and gloom: upward revisions to previous GDP figures suggest the UK economy is in reality somewhat greater than expected a few months ago. While this may ease some of the pressure on the government to pump in more public funds, Finance Minister Reeves still faces difficult task in order to cover the fiscal gap and yes reassure the markets that it has a reliable development plan.

We expect a mix of tax hikes next month, but investors will also demand commitments to at least modest spending cuts — which could limit the blow to growth in 2026.