The UK financial system “continued to slow” and recorded zero progress in July, in keeping with official figures displaying an enormous drag from producers.
The info from the Workplace for Nationwide Statistics (ONS) adopted a determine of 0.4% progress the earlier month and adverse progress of 0.1% in Might.
Output of 0.3% was achieved over the April-June quarter as an entire, slowing from the 0.7% recorded over the primary three months of 2025.
Cash newest: Response as financial system slows
The most recent figures sign concern for the months forward because the labour market slows and the results of elevated inflation and the US commerce battle dampen demand.
Commenting on July’s exercise, ONS director of financial statistics Liz McKeown mentioned that declines in manufacturing offset meagre progress in companies and building.
“Growth in the economy as a whole continued to slow over the last three months”, she mentioned.
“While services growth held up, production fell back further.
“Inside companies, well being, pc programming and workplace help companies all carried out properly, whereas the falls in manufacturing have been pushed by broad based mostly weak spot throughout manufacturing industries.”
The Labour authorities made rising the financial system its precedence when taking workplace final summer season however the chancellor admitted this week that it had change into “stuck”.
The US commerce battle has proved a drag on exercise globally this yr however Rachel Reeves has additionally been accused of making use of the brakes herself by plundering the non-public sector for money since taking workplace, harming funding and employment within the course of.
Employers reacted to a £40bn finances tax raid by chopping jobs and passing on rising prices to prospects.
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2:15
Tax rises taking part in ’50:50′ function in rising inflation
Inflation is at present operating at virtually double the Financial institution of England’s 2% goal, harming the prospects for future rate of interest cuts.
Consideration is popping swiftly to the following finances, due on 26 November, and nerves over what measures are to return are hampering sentiment.
Ms Reeves is below strain to lift extra taxes to fill a black gap within the public funds estimated to be between £30-£40bn.
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6:30
UK debt change into dearer
The chancellor has once more dominated out elevating earnings tax, worker nationwide insurance coverage contributions and VAT which, she has all the time acknowledged, would trigger direct hurt to “working people”.
Potential targets embody the rich. Banks additionally worry a raid on their income.
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1:17
Is Labour plotting a ‘wealth tax’?
Rain Newton-Smith argued that new tax rises on companies would quantity to an additional choke on progress and employment, harming working individuals not directly within the course of.
The CBI needs to see reforms to enterprise charges and cuts to VAT thresholds, amongst different issues, because the non-public sector shoulders its bigger tax burden.
“The world is different from when Labour drafted its manifesto, and when the facts change so should the solutions,” Ms Newton-Smith added.
The chancellor has responded with plans to ease some obstacles to enterprise as a part of efforts to enhance progress.
The Treasury is contemplating an overhaul of small enterprise charges aid guidelines to finish a so-called “cliff edge” penalty going through corporations opening a second premises.
The British Retail Consortium warned individually on Friday that 400 of the nation’s largest shops might shut if such premises fall right into a proposed greater enterprise charges band.
It argued that they have been already below vital strain from hovering employment and tax prices which had accounted for the closure of 1,000 such areas over the previous 5 years.
Commenting on the ONS knowledge, a spokesperson for the Treasury mentioned: “We know there’s more to do to boost growth, because, whilst our economy isn’t broken, it does feel stuck.
“That is the results of years of underinvestment, which we’re decided to reverse by our Plan for Change.
“We’re making progress: growth this year was the fastest in the G7; since the election, interest rates have been cut five times, and real wages have risen faster than they did under the last government.
“There’s extra to do to construct an financial system that works for, and rewards, working individuals. That is why we’re chopping pointless pink tape, reworking the planning system to get Britain constructing, and investing billions of kilos into inexpensive properties, Sizewell C, and native transport throughout the nation.”
Shadow chancellor Mel Stride responded: “Whereas the federal government lurch from one scandal to a different, borrowing prices lately hit a 27-year excessive – a damning vote of no confidence in Labour that makes painful tax rises all however sure.
“It is little wonder that Starmer has stripped Reeves of control over the budget. But sidelining her is not enough – he must also reject her failed economic approach that has left Britain poorer.”
