The UK economy flatlined in July as the most important contraction for a 12 months within the manufacturing sector offset a bumper month on the excessive avenue.
The Office for National Statistics (ONS) mentioned there was zero development in gross home product (GDP) month on month in July, towards 0.4 per cent development in June.
It got here after the manufacturing sector noticed exercise pull again by 1.3 per cent – the most important contraction since July 2024. This held again development within the wider economic system, with the services sector up 0.1 per cent because of an growth of 0.6 per cent in retail and construction rising by 0.2 per cent.
Liz McKeown, director of financial statistics on the ONS, mentioned: “Development within the economic system as an entire continued to sluggish during the last three months. Whereas companies development held up, manufacturing fell again additional.
“Inside companies, well being, pc programming and workplace assist companies all carried out nicely, whereas the falls in manufacturing have been pushed by broad-based weak spot throughout manufacturing industries.
“Within the newest month, GDP confirmed no development, with will increase in companies and building offset by falls in manufacturing. Falls in manufacturing have been pushed by broad-based weak spot throughout manufacturing industries.”
Companies output grew 0.4 per cent and building by 0.6 per cent throughout the three months to July, contributing to an general rise of 0.2 per cent for the economic system throughout the summer season interval.
Nonetheless, which means a 3rd consecutive slowdown interval as, in a single professional’s phrases, the economic system “grinds to a halt”. Lindsay James, funding strategist at Quilter, identified that even the areas that confirmed development within the final three months are slowing – a direct consequence of the government elevating prices for employers.
“After a optimistic first half of the 12 months, UK financial development is slowly grinding to a halt as soon as once more,” mentioned Ms James.
“GDP did not develop month-on-month in July, and slowed to simply 0.2 per cent on a three-monthly foundation. This improve was pushed primarily by the companies and building sectors, however manufacturing output fell. Nonetheless, development is slowing in these sectors and is probably going the results of actions taken by the Labour authorities now being realised, with the rise in employer nationwide insurance coverage contributions having a big affect on enterprise confidence.
“With the summer season now over and the economic system supposedly getting out of its slumber, we now face persevering with uncertainty within the lead-up to the funds in November given the precarious place the chancellor finds the general public funds in. It’s estimated that the fiscal gap that must be plugged is wherever between £20bn and £50bn. Whereas that’s a variety, it means one factor for a authorities that has proven it can battle to chop spending – extra tax rises.”
