UK GDP flatlined in July, with zero growth recorded after a 0.4% expansion in June, according to the Office for National Statistics (ONS).
Over the three months to the end of July, the economy grew by just 0.2% compared with the previous quarter.
The ONS said the service sector remained a bright spot, supported by healthcare, computer programming and office support services, but this was offset by weakness in manufacturing.
The figures pile pressure on the government ahead of the November Budget, with boosting economic growth a key political priority.
Market reaction
Raymond James European strategist Jeremy Batstone-Carr said July’s flat reading confirmed the economy “stalled at the start of the second half of the year”, though underlying details left “some scope for cautious optimism”.
He noted that warm weather supported agriculture and construction but weighed on utilities and retail spending.
YOU Asset Management CEO Derrick Dunne said the figures made for “disappointing reading” as the government prepares for the Autumn Budget.
“The economy needs growth to outrun its debts and at present, this is not being delivered,” he warned.
Nutmeg strategist Scott Gardner highlighted that businesses were still digesting April’s National Insurance changes and the living wage increase, with uncertainty weighing on investment.
“If growth is the top priority, the economy’s recent sluggishness is bad news ahead of the upcoming Budget,” he added.
Aberdeen deputy chief economist Luke Bartholomew said the flat reading was “in part due to payback from very strong growth in June”.
He expects growth to slow in the second half of the year but said inflation remained the Bank of England’s main focus, with one more rate cut still possible before year-end.
Mattioli Woods fund manager Jonathan Marchant noted that July’s in-line reading followed “forecast-beating” indicators such as retail sales and consumer confidence.
He said the UK economy had shown “remarkable resilience” despite external shocks, but added that momentum heading into the Budget remains uncertain.
