2024-09-11 06:50:49
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LONDON — The U.K. economy continued to flatline in July on a month-on-month basis, flash figures published from the Office for National Statistics showed Wednesday.
Gross domestic product (GDP) came in below the expectations of economists polled by Reuters, who had forecast growth of 0.2%.
The country also logged no GDP growth in June.
Britain’s dominant services sector showed slight growth of 0.1% in the month to July, while production and construction output fell by 0.8% and 0.4%, respectively.
Britain’s economic growth was up 0.5% in the three month to July, slightly below economist expectations and the 0.6% recorded in the second quarter ending in June.
“The economy recorded no growth for the second month running, though longer term strength in the services sector meant there was growth over the last three months as a whole,” Liz McKeown, director of economic statistics at the ONS, said.
The U.K. economy had recorded modest but steady expansion almost every month so far this year, having emerged from a shallow recession at the start of the year.
The reading is the first under Prime Minister Keir Starmer’s new Labour government, which was elected on July 4.
Finance Minister Rachel Reeves said the print left her “under no illusion” of the challenges faced by the U.K. economy.
“I will be honest with the British people that change will not happen overnight. Two quarters of positive economic growth does not make up for fourteen years of stagnation,” Reeves said.
It comes ahead of the forthcoming Oct. 30 Autumn Statement, when Reeves will reveal her annual budget. She has already warned will be painful after she said she inherited a £22 billion ($29 billion) hole in the public finances from the former Conservative government. He predecessor Jeremy Hunt has denied the claims, describing the alleged black hole as “fiction.”
Lindsay James, investment strategist at Quilter Investors, said the prospect of tax raises could add further caution to consumer spending over the coming months.
“Tax rises have been flagged ahead of the Autumn Budget, and consumers and businesses may feel rather more cautious heading into the winter months as they await details from the Treasury,” she said.
But she added that further movement in interest rates anticipated from the Bank of England could help ease wider growth pressures. The central bank is set to meet next week for its latest policy decision, after cutting rates for the first time in four years last month.
“This month may just be a blip however, given recent positive noises that have been sounded about the state of the wider economy, especially as rate cuts will continue to be delivered over the coming year,” James noted.
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What factors contributed to the UK economy flatlining for the second consecutive month in July 2024?
Table of Contents
UK Economy Unexpectedly Flatlines for Second Month in a Row
The UK economy has unexpectedly flatlined for the second month in a row, according to flash figures published by the Office for National Statistics (ONS) on September 11, 2024 [[1]]. The news comes as a surprise to economists, who had forecast a growth of 0.2% in July [[1]]. This lack of growth follows a similar trend in June, where the economy also failed to grow [[1]].
The dominant services sector showed a slight growth of 0.1% in July, while production and construction output fell by 0.8% and 0.4%, respectively [[1]]. Despite this, the UK economy did record a 0.5% growth in the three months to July, although this was slightly below economist expectations and the 0.6% recorded in the second quarter ending in June [[1]].
Liz McKeown, director of economic statistics at the ONS, commented, “The economy recorded no growth for the second month running, though longer-term strength in the services sector meant there was growth over the last three months as a whole” [[1]].
The UK economy has been experiencing modest but steady expansion almost every month this year, having emerged from a shallow recession at the start of the year [[1]]. This latest reading is the first under Prime Minister Keir Starmer’s new Labour government, which was elected on July 4 [[1]].
Finance Minister Rachel Reeves has expressed her concerns over the challenges faced by the UK economy, stating, “I will be honest with the British people that change will not happen overnight. Two quarters of positive economic growth do not make up for fourteen years of stagnation” [[1]]. Reeves has already warned that the forthcoming Autumn Statement, set to take place on October 30, will be painful, citing a £22 billion ($29 billion) hole in the public finances inherited from the former Conservative government [[1]].
The prospect of tax rises has also been flagged ahead of the Autumn Budget, which could lead to further caution in consumer spending over the coming months, according to Lindsay James, investment strategist at Quilter Investors [[1]].
Despite the current flatlining, a recent report by PwC suggests that the UK is likely to be the third-fastest-growing G7 economy over the next decade, behind the US and Canada [[3]]. This optimism is reflected in the latest economic data and reports from the UK, including Budgets and inflation forecasts [[2]].
the UK economy’s unexpected flatlining for the second month in a row has raised concerns over the country’s economic growth. While the services sector has shown slight growth, production and construction output have fallen, and the prospect of tax rises ahead of the Autumn Budget may lead to caution in consumer spending. However, longer-term forecasts suggest that the UK economy is likely to experience growth over the next decade.
UK Economy Flatlines for Second Consecutive Month in July 2024
The UK economy has unexpectedly flatlined for the second month in a row, according to flash figures published by the Office for National Statistics (ONS) on September 11, 2024 [[1]]. This lack of growth follows a similar trend in June, where the economy also failed to grow [[1]]. The news comes as a surprise to economists, who had forecast a growth of 0.2% in July [[1]].
The dominant services sector showed a slight growth of 0.1% in July, while production and construction output fell by 0.8% and 0.4%, respectively [[1]]. Despite this, the UK economy did record a 0.5% growth in the three months to July, although this was slightly below economist expectations and the 0.6% recorded in the second quarter ending in June [[1]].
Liz McKeown, director of economic statistics at the ONS, commented, “The economy recorded no growth for the second month running, though longer-term strength in the services sector meant there was growth over the last three months as a whole” [[1]].
The UK economy has been experiencing modest but steady expansion almost every month this year, having emerged from a shallow recession at the start of the year [[1]]. This
