The economic performance aligns with economists' expectations, potentially easing concerns for Reeves as she prepares for the Labour government's first budget.

Despite this positive news, analysts caution that uncertainties remain, with a slowdown in growth anticipated in the coming months.

Financial services expert Samuel Edwards highlighted the widening trade deficit as a significant concern, with UK exports falling below historic levels.

The UK economy experienced a modest growth of 0.2% in August, following two months of stagnation, as reported by the Office for National Statistics.

This growth translates to a year-on-year increase of 1%, providing a boost for Chancellor Rachel Reeves ahead of the upcoming autumn budget.

Economist James Smith from ING noted that while the economy is currently growing, earlier strong quarterly GDP readings are unlikely to be sustained.

The trade in goods deficit rose by £2.6 billion to £52.4 billion, while the services surplus narrowed, indicating ongoing challenges in the trade sector.

Chancellor Reeves has acknowledged that balancing the budget will involve tough decisions, particularly in light of rising public debt, which has reached 100% of GDP.

The Labour government is also facing pressures from business owners, with a 6% increase in those planning to sell their businesses due to fears of a Labour tax raid.

The growth data was officially reported on October 11, 2024, marking a critical moment for the new government as it navigates economic recovery.

As the government prepares for its budget, the focus will be on fostering public optimism about the economy while addressing fiscal challenges.

Overall, the recent economic growth presents both opportunities and challenges for the Labour government as it seeks to implement its financial strategies.