UK Economy Stalls: Zero Growth in July Amid Manufacturing Slump
The UK economy stagnated in July, recording zero growth for the month, according to official figures released by the Office for National Statistics (ONS). The lack of expansion was attributed to a decline in manufacturing output, which was offset by an increase in the service sector. This sluggish performance raises concerns ahead of Chancellor Rachel Reeves' Budget announcement on November 26.
The ONS reported that the economy saw zero growth in July, following a 0.4 expansion in June. However, monthly figures are volatile, and the ONS has said it will now focus on growth over a rolling three-month period. In the three months to July, the economy expanded by 0.2%, according to the ONS.
The manufacturing sector suffered its biggest contraction in a year, with output declining by an estimated 1.3% in July. This decline was particularly significant given that the sector has been a key driver of economic growth in recent years. The service sector, on the other hand, continued to expand, with output increasing by 0.5%.
The government is under mounting pressure to deliver on its key priority of boosting economic growth ahead of the Budget. Chancellor Rachel Reeves will outline the government's tax and spending plans on November 26, amidst speculation about potential tax hikes.
According to a spokesperson for the Treasury, "The Chancellor is committed to delivering a Budget that supports economic growth and helps businesses thrive." However, some experts have expressed concerns that the government may not be doing enough to address the underlying issues driving the economy's sluggish performance.
Economist Simon Kirby of the Centre for Economic Performance said, "While the zero growth in July is disappointing, it's essential to put this figure into context. The three-month average shows a 0.2% increase, which suggests that the economy is still growing, albeit slowly." He added, "The government needs to focus on policies that will boost productivity and investment, rather than just relying on short-term stimulus measures."
As the UK economy continues to stall, businesses and investors are watching closely for signs of improvement ahead of the Budget. With the Chancellor set to outline her tax and spending plans in just a few weeks' time, all eyes will be on whether she can deliver a package that will help stimulate growth and get the economy back on track.
In related news, the ONS has announced that it will continue to monitor economic performance closely, with a focus on the three-month average. This shift in emphasis reflects the volatility of monthly figures and the need for a more nuanced understanding of the economy's underlying trends.
The UK economy's sluggish performance is likely to be a major topic of discussion at the upcoming Budget announcement. With the government under pressure to deliver on its growth promises, all eyes will be on Chancellor Reeves as she outlines her plans for boosting economic growth.
This story was compiled from reports by BBC Business and BBC Business.
