The Bank of England’s deputy governor, Sarah Breeden, stated on Thursday, October 15, 2026, that the United Kingdom economy has shown unexpected resilience following a recent energy price shock. The comments followed the release of official data showing that the gross domestic product (GDP)—a measure of all the goods and services produced—grew by 0.1% in August. This growth occurred despite economist forecasts that had predicted a 0.1% decline for the month.
The reported growth follows a 0.4% increase in GDP during July. Breeden attributed the economy's performance to businesses having learned lessons from a previous energy shock in 2022. She noted that many firms used hedging—a financial strategy to protect against price fluctuations—which reduced the immediate impact of rising energy costs. Additionally, she cited the global boom in artificial intelligence (AI) as a factor supporting domestic business activity, including the development of data centers.
Official statistics from the Office for National Statistics (ONS) indicated that strong factory production contributed to the August growth. However, inflation remained a factor for households, with the Consumer Prices Index reaching a five-month high of 3.1% in August. Breeden noted that while some people face a "real challenge" regarding affordability and the cost of living, the labor market has remained stable and overall economic activity has not seen a sharp decline.
The resilience noted by the Bank of England suggests that the private sector is currently absorbing higher costs rather than passing them directly to consumers. However, Breeden cautioned that the central bank is monitoring whether these energy costs have been truly managed or if their impact has simply been delayed. This distinction is critical for future interest rate decisions by the Bank of England, which affect the monthly mortgage payments for homeowners and the borrowing costs for small-business owners.
The next significant indicator for the UK economy will be the release of new monthly inflation data by the ONS, scheduled for next week. These figures will further clarify the cost-of-living trajectory for households. Additionally, the August growth figures provide a data point for the Chancellor of the Exchequer as the government prepares the autumn Budget. The Bank of England continues to assess whether consumer behavior and the labor market will remain steady as global volatility, specifically the war in Iran, continues to influence energy markets.