Official figures have shown that the UK economy failed to grow in July after flatlining in June. According to analysts, there was expected to be a slight growth of 0.2% in July. The services sector was boosted by the Euros and Olympics but construction and production output had both fallen, leading to another month without growth. The absence of growth presents a test for the new Labour government, with boosting the economy a prioritised goal.
Liz McKeown, Director of Economic Statistics at the Office for National Statistics claimed that despite the lack of growth in July, “longer term strength in the services sector meant there was growth over the last three months as a whole,” with computer programmers and health services driving such growth. However, output dropped for advertising, architects and engineers, whilst firms in the car and machinery sectors had an especially poor month.
Monthly figures for GDP are typically an early estimate, revised after more data becomes available. Although these figures showed the economy to have stagnated in July, it does not mean that the UK is on the brink of another recession, said Ruth Gregory at Capital Economics. The UK fell into a shallow recession at the end of 2023 when the economy failed to grow for two three-month periods consecutively, mid-last year.
The new Labour government, which took office in July, is under “no illusion” regarding the scale of the challenge ahead in making the UK the fastest-growing economy in the G7, said Chancellor Rachel Reeves. It was highlighted that lower growth would bring a smaller tax take, thus giving the government less room for manoeuvre in the Budget scheduled for October. The ONS noted that retailers and hospitality businesses saw a rise in sales in July when the England men’s football team went through to the European Championships. However, some restaurants reported negative impacts on footfall
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