The UK economy stalled in July, official figures reveal, delivering a blow to Rachel Reeves as she prepares for a challenging budget.
This marked a slowdown from June, when the economy had grown by 0.4%, according to the Office for National Statistics.
Earlier in the year, GDP had expanded strongly, making the UK the fastest-growing economy in the G7, but a deceleration in the second half had been widely anticipated.
The ONS reported that growth in the services and construction sectors was offset by a 0.9% drop in the production sector, which includes manufacturing.
The disappointing figures are likely to raise questions over Labour’s pledge to revive economic growth
A Treasury spokesperson said: “We know there’s more to do to boost growth, because, whilst our economy isn’t broken, it does feel stuck. That’s the result of years of underinvestment, which we’re determined to reverse through our plan for change.”
The ONS reported that GDP increased by 0.2% in the three months to July, compared with the 0.3% growth recorded in the three months to June. Economists regard these three-month figures as a more reliable indicator of the economy’s underlying health, as one-month data can be more volatile.
The ONS director of economic statistics, Liz McKeown, said: “Growth in the economy as a whole continued to slow over the last three months. While services growth held up, production fell back further.
“Within services, health, computer programming and office support services all performed well, while the falls in production were driven by broad-based weakness across manufacturing industries.”
