UK GDP rose 0.1% in August, beating economists’ forecast of a 0.1% contraction, after expanding 0.4% in July, according to the Office for National Statistics. Output increased 0.7% across the three months to August and 2.1% annually, the strongest yearly growth since August 2022. Production grew 0.8%, led by manufacturing, but services were flat, construction fell 0.2% and consumer-facing services declined 0.3%. The data precede the Bank of England’s next interest-rate assessment and provide a firmer backdrop for valuation discussions, although weak consumer demand means buyers will continue to distinguish sharply between resilient industrial businesses and companies exposed to discretionary spending.

Bank of England deputy governor Sarah Breeden said businesses absorbed the energy-price shock better than in 2022 because hedging was stronger. The Bank is assessing whether costs were reduced or merely delayed. Buyers will scrutinise hedging arrangements and whether higher energy costs emerge after completion.

The UK has fallen to 24th in Opinium’s global ranking of countries for starting a business, down from 19th a decade ago. The survey found 57% of entrepreneurs believe launching a business has become harder, citing rising costs and economic uncertainty. Separately, Wealth Club found 35% of wealthy investors have sold assets or plan to do so ahead of the Budget amid concerns about potential capital gains tax increases, which could discourage future investment and asset sales.

The Chancellor is set to hike taxes on banks in his upcoming Budget, according to the Guardian. This comes after John Healey told an audience in Bangkok that banks were a “jewel” in the crown of the British economy. The paper understands that Healey is minded to increase the surcharge banks pay on their profits, from the current 3% rate to 8% – reversing a cut made by Jeremy Hunt. Analysis by the TUC, which has been lobbying for the hike, estimates that this could raise £2.25bn a year. However, lobby group UK Finance recently warned the move would mean a loss of around £6bn in UK output over the five-year Budget forecast period, rising to nearly £20bn over 10 years.

The Treasury is considering higher business rates for office buildings with rateable values above £500,000, potentially raising £1bn. About 9,000 properties in London and the South East could be affected, particularly in Canary Wharf and the Square Mile, while larger retail and hospitality premises may be exempt. Office-based businesses preparing for sale may need to reflect any increase in forecasts, because buyers are likely to capitalise recurring property costs into lower valuations.

Harriet Rees, Starling Bank’s chief information officer, warns that the UK risks falling behind in AI without significant investment in domestic infrastructure. She also points to the dangers of relying on US tech giants, saying: “We’re always going to be second in the queue if we don’t have our own infrastructure.” Starling plans to develop an AI model using over 15bn anonymised transactions, aiming to enhance fraud detection by 2027. Rees urged the Government to increase its £500m Sovereign AI fund, noting that it is insufficient for the UK’s needs.

Top executives in the UK face challenges with developing AI as resistance to returning to the office continues, City AM reports. According to KPMG’s 2026 global CEO outlook, 21% of UK bosses said they see resistance from staff to coming back into the office. KPMG’s report also found 87% of British bosses are prioritising AI investment, expecting returns within three years. However, 81% acknowledge ethical concerns surrounding AI. Separately, although 86% of UK CEOs express confidence in their company’s growth, broader economic optimism has declined from 79% to 64%.

The Government has rejected calls to extend national insurance (NI) cuts for workers aged 21 to 25, dismissing a recommendation from the House of Commons’ work and pensions committee.

UK banks are holding excessive capital buffers that could stimulate economic growth, according to David Bailey, executive director of Prudential Policy at the Bank of England. He said discussions are underway with international regulators to simplify capital structures while the Prudential Regulation Authority was looking to refine capital requirements to free up more capital to be pumped into the economy. Bailey said banks are maintaining significant management buffers beyond regulatory requirements, which could support customers and households.