UK Economy Sees Zero Growth in July, Casting Shadow Over Budget Plans
The UK economy failed to grow in July, according to the latest official figures released by the Office for National Statistics (ONS). The zero growth rate follows a 0.4 expansion in June, marking a slowdown in economic activity.
Monthly figures are volatile, and over the three months to the end of July, the economy grew by 0.2 compared with the previous three months, the ONS said. However, this modest growth is unlikely to alleviate concerns about the UK's economic prospects.
The service sector performed well, driven by strong performances in the health sector, computer programming, and office support services. Nevertheless, these gains were offset by a weak performance in the manufacturing sector, which has been struggling with supply chain disruptions and rising costs.
Yael Selfin, chief economist at KPMG UK, attributed the weak start to the third quarter to "temporary factors" that had boosted growth earlier this year. "Economic activity is expected to slow in the second half of the year," she warned. "This is a sign of things to come."
The ONS data comes as Chancellor Rachel Reeves prepares to outline her tax and spending plans in the Budget on November 26. With increasing speculation that she will have to raise taxes to meet her self-imposed fiscal rules, the latest figures are likely to add pressure on the government to deliver on its key priority of boosting economic growth.
The UK's economy has been facing headwinds from a combination of factors, including Brexit uncertainty, high inflation, and rising interest rates. The slowdown in July is a reminder that these challenges persist, and policymakers will need to respond with targeted measures to support businesses and households.
In the short term, investors are likely to remain cautious, given the uncertain economic outlook. The pound fell against major currencies following the release of the ONS data, while UK government bond yields rose.
As the Budget approaches, business leaders and economists will be watching closely for signs that the government is willing to take bold action to stimulate growth. With the economy stuck in neutral, the pressure is mounting on Chancellor Reeves to deliver a plan that will get the UK's economic engine revving again.
*Reporting by Bbc.*
