The UK economy unexpectedly failed to grow in July, following no growth in June, according to official data. Analysts had predicted a modest rise of 0.2%, but that forecast was not met.
A vibrant summer of sporting events, including the Euros, provided some support to the services sector—especially in retail and hospitality. However, the broader economy struggled as both production and construction sectors saw declines. This second consecutive month of stagnation presents a significant hurdle for the newly elected Labour government, which has placed economic recovery at the heart of its agenda.
Despite the disappointing figures, Liz McKeown, Director of Economic Statistics at the Office for National Statistics (ONS), noted that there was still growth over the past three months overall, driven by longer-term resilience in the services sector. Key drivers of this growth were the tech and health industries, the latter of which rebounded following strikes in June. However, McKeown pointed out that industries such as advertising, architecture, and engineering experienced declines in output.
Gross Domestic Product (GDP), a key measure of economic performance, is under close scrutiny as a barometer of the UK’s financial health. These latest figures are early estimates and could be adjusted once more data is gathered.
Chancellor Rachel Reeves acknowledged the challenge ahead, stating she is “under no illusion” about the scale of the economic difficulties facing the government.
