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LONDON – The British economy continued to grow in July on a monthly basis, preliminary figures released by the Office for National Statistics showed on Wednesday.
GDP was below expectations of 0.2% growth in a Reuters poll of economists.
The country also recorded no GDP growth in June.
Britain's dominant services sector showed a 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 rose by 0.5% in the three months to July, slightly below economists' expectations and below the 0.6% recorded in the second quarter to June.
“The economy recorded no growth for the second month running, although longer-term strength in the services sector meant there was growth over the past three months as a whole,” said Liz McQueen, director of economic statistics at the ONS.
The UK economy has recorded modest but steady expansion almost every month so far this year, after emerging from a slight recession at the start of the year.
This is the first reading under the new Labour government led by Prime Minister Keir Starmer, which was elected on July 4.
Chancellor Rachel Reeves said the publication had left her “under no illusion” about the challenges facing the UK economy.
“I will be honest with the British people and say that change will not happen overnight. Two quarters of positive economic growth do not make up for 14 years of recession,” Reeves said.
It comes ahead of next year’s autumn announcement on October 30, when Reeves will unveil her annual budget. She has already warned it will be painful after saying she inherited a £22bn ($29bn) hole in the public finances from the previous Conservative government. Her predecessor, Jeremy Hunt, has denied the claims, calling the alleged black hole a “fiction”.
The prospect of a tax hike could make consumers more cautious about spending in the coming months, said Lindsay James, investment strategist at Quilter Investors.
“Taxes have been raised ahead of the Autumn Budget, and consumers and businesses may be feeling more cautious heading into the winter months as they await details from the Treasury,” she added.
But she added that further interest rate moves expected from the Bank of England could help ease pressures on broader growth. The central bank is due to meet next week to make its latest policy decision, after cutting interest rates for the first time in four years last month.
“This month may be a blip, given the recent positive buzz about the state of the broader economy, especially as interest rate cuts continue into next year,” James noted.
