UK economy flatlined in July as GDP figures reveal zero growth
Figures released on Friday reveal the UK's economy flatlined in July.
The UK economy recorded no growth in July after 0.4% expansion in June, according to the Office for National Statistics (ONS).
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It follows a 0.4% increase in June, with the upturn in GDP marking an unexpected boost at the time figures were announced.
GDP is a measure of all products produced in the UK economy, with July's 0% figure coming as sullen news to Chancellor Rachel Reeves.
It comes as the British manufacturing sector saw activity fall by 1.3%, marking the biggest contraction in activity since July 2024.
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This held back growth in the wider economy, with the services sector up 0.1% thanks to expansion of 0.6% for retail and construction growing 0.2%.
It marks a prolonged slowing of UK economic growth, between April and June as businesses battled higher costs and Donald Trump’s tariffs came into force.
Liz McKeown, ONS director of economic statistics, said: “Falls in production were driven by broad-based weakness across manufacturing industries.”
"We know there's more to do to boost growth, because, whilst our economy isn't broken, it does feel stuck, HM Treasury Spokesperson.
“That’s the result of years of underinvestment, which we’re determined to reverse through our Plan for Change.
"We’re making progress: growth this year was the fastest in the G7; since the election, interest rates have been cut five times, and real wages have risen faster than they did under the last government.
"There's more to do to build an economy that works for and rewards working people.
"That's why we are cutting unnecessary red tape, transforming the planning system to get Britain building, and investing billions of pounds into affordable homes, Sizewell C, and local transport across the country.”
The latest data also comes ahead of the Bank of England’s next interest rate decision on September 18, with policymakers weighing up flagging growth with stubborn inflation.
Martin Beck, chief economist at WPI Strategy, said: “July’s stagnation underlines the hurdles the economy faces.“
Inflation remains uncomfortably sticky, interest rates are still in restrictive territory, and talk of fiscal ‘black holes’ and likely tax rises in November’s Budget risks weighing on confidence.”
Despite the subdued start to the third quarter, Rob Wood at Pantheon Macroeconomics said he believed the economy is heading for growth overall of 0.2% between July and September.
This would mark a further slowdown after the economy grew by 0.3% in the second quarter and by 0.7% in the first three months.
He is forecasting the Bank to hold rates at 4% until at least the end of 2025.
He said: “Big picture, the economy is looking pretty resilient to the barrage of shocks faced this year.“
For the Monetary Policy Committee, growth close to potential will limit the emergence of spare capacity and keep Bank Rate on hold until year-end at least.”
