Pressure builds on government as figures reveal economy stalling

THE UK economy flatlined in July after the manufacturing sector saw the biggest contraction for a year.

- HOLLY WILLIAMS

The Office for National Statistics (ONS) said there was zero growth in gross domestic product (GDP) month on month in July, against 0.4% growth in June.

While most economists had expected zero expansion in July, it adds to mounting pressure on the government, which has set itself a key priority to boost economic growth.

Attention is now focused on the upcoming November 26 Budget, with speculation mounting that Chancellor Rachel Reeves may have to raise taxes to fill a black hole in the nation's finances.

The pound slumped after the data, falling 0.3% to $1.354 and 0.2% lower at €1.155 in mid-morning trading yesterday.

The flat GDP figure for July came after the manufacturing sector saw activity pull back by 1.3% - the biggest contraction since July 2024.

This held back growth in the wider economy, with the services sector up 0.1% thanks to expansion of 0.6% for retail as hot weather boosted the high street, and construction growing 0.2%.