UK Economy Growth in July did not grow at all. The data from the Office for National Statistics (ONS) said the economy flat-lined in July while manufacturing was experiencing its biggest fall in a year. This zero-growth figure follows a rise of 0.4% in June and raises new fears about slowing momentum.
UK Economy Growth in July: An Overview of the ONS data
The ONS said the UK economy grew 0.2% over the three months to July. However, no growth occurred in July. The service sector increased by 0.4%. The economy was boosted by health and social care, IT and professional services. All three were limited to a steady boost.
However, the production sector was a weight on results, contracting by 1.3%, and the ONS said the fall in manufacturing was the biggest blow for factories since July last year.
The UK Economy Growth in July looks weaker when compared to early 2025. From January to March the GDP increased 0.7%. From April to June the GDP increased 0.3%. Economists believe that the UK economy has continued to slow.Have growth continue and assume a flat trend in future quarters might be consistent. There have been calls for economic changes and improvements.
Budget Pressure and Policy Dilemmas
July’s weak performance heightens pressure on the Autumn Budget on 26 November. Chancellor Rachel Reeves must juggle her fiscal rules with stimulating growth. She won’t raise taxes for workers – income tax, VAT or National Insurance – leaving little room for manoeuvre.
There are estimates of a financial hole of £18bn to £50bn. Speculation about rises in business taxes has grown. Businesses are already taking the hit of increased employer contributions and additional wage costs, and any new measures may reduce their investment plans. For businesses, uncertainty around the Budget is almost as damaging as possible tax rises.
UK Economy Growth in July and Business Confidence
We must also consider that UK Economy Growth in July also echoes a lower business confidence. Many businesses are not expanding or recruiting ahead of the Budget, they are waiting to see what the medium to long-term tax and spending landscape looks like. Economists have said this looming uncertainty is acting as a brake on growth.
Employers say higher costs—like April’s increase in the minimum wage and National Insurance Contributions—have already changed trading environments, and any more tax changes may impede investment. Also, the analysts noted, that if the Budget is moved to a later date, it stretches out uncertainty and continues to keep low-growth in place.
The Bank of England’s Decision
The Bank of England will make its next interest rate decision on 18 September. The decision will be tricky for Bank policy makers; whether to keep rates high to counter inflation, or to bring them down to support weak growth. The stagnant data released in July creates even more complexity for policy makers deciding on a suitable path of action.
KPMG UK chief economist Yael Selfin commented that the weak July data may be a “sign of things to come”. The growth rate in the first half of 2025 will likely have been partially lifted by temporary factors, however, these are now receding. Without any new momentum, the growth rate may be much slower in the second half of 2025.
Political and public reaction
The Treasury said the economy is not broken but appears stuck. They stated they need to reverse years of underinvestment. They were promoting their growth plan as a long term solution. Opposition parties rejected the Treasury’s arguments.
Shadow Chancellor Sir Mel Stride stated the government has lost sight of economic priorities. The Liberal Democrats argued that the government’s policies is continuing to act like a handbrake on growth; slowing the arrow of the economy.
Critics have also considered rising borrowings – now at 27-year highs. Gearing and borrowings are risk; stock and bond reliance could erode future confidence or corporate taxes could be raised.
Conclusion: UK Economy Growth in July a warning sign for future
The UK Economy Growth in July is fragile and slowing. Services provided some support to the economy over a narrow margin, but weakness in manufacturing and business uncertainty demonstrates deeper-rooted risks. The Budget is on the way and companies and households want clarity before forging ahead.
While the government is stuck on plan me, July’s flat result could foreshadow a tougher economic agenda, if left unresolved.
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