UK Economy Stalls for Second Consecutive Month in July

The British Office for National Statistics announced on Wednesday that the UK’s GDP remained flat in July, following a similar trend in June. Economists had forecast a growth of 0.2%, but declines in production and construction offset the strong services sector.

The UK economy has stalled for the second month in a row, indicating that the rapid recovery from recession is losing momentum. This slowdown comes as a blow to Prime Minister Keir Starmer.

Despite a strong start to the year, with the UK economy growing by 1.3% in the first half, the economic performance is expected to be significantly weaker in the second half. The Bank of England and private sector economists predict an average growth of 0.3% in the third and fourth quarters. Notably, the UK economy has not grown in three of the past four months.

Labor’s recent general election victory was largely based on promises to repair public finances through economic growth and deliver improved living standards. Prime Minister Keir Starmer has pledged to achieve the fastest sustained growth in the G7 by reforming the planning system and boosting investment. However, this goal seems ambitious, given the UK’s decade-long struggle with anemic productivity growth.

Economists Ana Andrade and Dan Hanson commented, “The stagnant GDP in July suggests that the UK economy may slow down in the second half of the year after strong growth in the first half. Despite the soft data, we still believe that the main risk is that this momentum lasts longer than we expect.”