UK economy stalls in July as headwinds grow

The UK economy stagnated in July, marking a tepid start to the third quarter of 2025 as consumers and businesses face headwinds from tax rises with the possibility of more to come at the crucial autumn budget.

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LONDON -

Gross domestic product (GDP) was unchanged over the month, a slowdown from the 0.4 per cent growth in June, the Office for National Statistics (ONS) said on Sept 12.

It was in line with the median forecast of economists surveyed by Bloomberg. Services barely grew and manufacturing plunged.

The figures provide a reality check for the Labour administration that is banking on strong growth numbers to help it navigate a tight fiscal situation and meet its promise to improve living standards.

"The stagnation in real GDP in July shows that the economy is still struggling to gain decent momentum in the face of the drag from previous hikes in taxes and possible further tax rises to come in the budget," said Mr Paul Dales, chief UK economist at Capital Economics.

The economy grew more than 1 per cent in the first six months of the year, allowing Prime Minister Keir Starmer to claim Labour was delivering the fastest growth among Group of Seven major industrial economies as pledged.