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LONDON – The UK economy continued to be flat in July from the previous month, preliminary data from the Office for National Statistics showed on Wednesday.
Gross domestic product (GDP) was below expectations of economists polled by Reuters, who forecast growth of 0.2%.
The country’s GDP did not grow in June either.
As of July, the UK-led services sector grew slightly by 0.1%, while production and construction output fell by 0.8% and 0.4% respectively.
The UK economy grew 0.5% in the three months to July, slightly below economists’ expectations and 0.6% in the second quarter to June.
Liz McKeown, director of economic statistics at the ONS, said: “While the long-term strength of the services sector has meant overall growth over the past three months, the economy has not grown for the second month in a row.”
The UK economy has recorded modest but steady expansion in almost every month so far this year, after emerging from a shallow recession at the start of the year.
The reading was the first under Prime Minister Keir Starmer’s new Labor government, which was elected on July 4.
Finance minister Rachel Reeves said the photo left her “disenchanted” with the challenges facing the UK economy.
“I have to be honest with the British people, change is not going to happen overnight. Two quarters of positive economic growth will not make up for 14 years of stagnation,” Levis said.
It comes ahead of the upcoming fall statement on Oct. 30, when Reeves will unveil her annual budget. She has warned it will be painful after saying she inherited a £22 billion ($29 billion) hole in public finances from the previous Conservative government. His predecessor Jeremy Hunt denied the claims and described the so-called black holes as “fiction”.
Lindsay James, investment strategist at Quilter Investors, said the prospect of tax hikes could make consumer spending further cautious in the coming months.
She said: “With tax hikes already being flagged ahead of the autumn budget, consumers and businesses may feel more cautious heading into winter as they await details from the Treasury.”
But she added that further expected rate changes from the Bank of England could help ease broader growth pressures. The central bank will meet next week to make its latest policy decision after cutting interest rates for the first time in four years last month.
“However, this month may be just a blip given the recent positive noise about broader economic conditions, especially as interest rate cuts continue to be implemented over the coming year,” James noted.
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