UK economy flat in July as growth stalls

The UK economy recorded no growth in July 2025, according to figures released by the Office for National Statistics (ONS), raising concerns that momentum is faltering after a stronger start to the year.

Gross domestic product was flat month-on-month, following a 0.4 per cent increase in June. On a rolling three-month basis, GDP grew by 0.2 per cent, underscoring the economy’s fragile state. Year-on-year growth held steady at 1.4 per cent.

The ONS reported that output was mixed across sectors. Production industries contracted, with manufacturing and mining particularly weak. Services and construction provided modest gains but were not sufficient to offset the overall slowdown.

Chancellor Rachel Reeves acknowledged the challenges, stating the economy “isn’t broken, but it does feel stuck.” She added that the government was preparing measures ahead of the Autumn Budget, scheduled for 26 November, to stimulate growth and investment.

Economists point to persistent inflation and weak external demand as key constraints. Inflationary pressures have limited the Bank of England’s room to ease interest rates, while global trade tensions and slowing US and European growth have weighed on exports.

The UK had been one of the stronger G7 performers in the first half of 2025, with 0.7 per cent GDP growth in the first quarter and 0.3 per cent in the second. Analysts warn, however, that the July reading signals a loss of momentum.

Business groups have cautioned that uncertainty over policy direction is discouraging investment. Many companies are delaying hiring or capital spending until there is greater clarity on fiscal and regulatory priorities.

With growth stalling and inflation still elevated, pressure is mounting on the government to set out a clear pro-growth strategy. The Autumn Budget will be scrutinised by both markets and businesses for measures capable of lifting productivity and restoring confidence.

The July figures mark a pause in recovery rather than a reversal, but the outlook remains finely balanced. Whether the UK can regain momentum will depend on the interplay of domestic policy, inflation control, and international demand over the coming months.