The UK economic system “continued to sluggish” and recorded zero progress in July, based on official figures exhibiting a giant 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 a complete, slowing from the 0.7% recorded over the primary three months of 2025.
Cash newest: Reaction as economy 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 development.
“Progress within the economy as a complete continued to sluggish during the last three months”, she mentioned.
“Whereas companies progress held up, manufacturing fell again additional.
“Inside companies, well being, laptop programming and workplace assist companies all carried out effectively, whereas the falls in manufacturing had been pushed by broad primarily based weak spot throughout manufacturing industries.”
The Labour authorities made rising the economic system its precedence when taking workplace final summer season however the chancellor admitted this week that it had develop into “caught”.
The US commerce battle has proved a drag on exercise globally this 12 months however Rachel Reeves has additionally been accused of making use of the brakes herself by plundering the personal sector for money since taking workplace, harming funding and employment within the course of.
Employers reacted to a £40bn finances tax raid by slicing jobs and passing on rising prices to clients.
Tax rises enjoying ’50:50′ position in rising inflation
Inflation is at present operating at virtually double the Bank of England‘s 2% goal, harming the prospects for future rate of interest cuts.
Financial institution information out final week instructed employers had been slicing jobs on the fastest pace since 2021.
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 underneath strain to boost extra taxes to fill a black gap within the public funds estimated to be between £30-£40bn.
UK debt develop into dearer
The chancellor has once more dominated out elevating earnings tax, worker nationwide insurance coverage contributions and VAT, which, she has at all times said, would trigger direct hurt to “working individuals”.
Doable targets embody the rich. Banks additionally concern a raid on their income.
However the chief govt of the CBI enterprise foyer group advised The Guardian newspaper earlier this week that Ms Reeves ought to now break her promise to not goal staff.
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 personal sector shoulders its bigger tax burden.
“The world is totally different from when Labour drafted its manifesto, and when the information change so ought to the options,” Ms Newton-Smith added.
The chancellor has responded with plans to ease some boundaries 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 companies opening a second premises.
The British Retail Consortium warned individually on Friday that 400 of the nation’s largest shops may shut if such premises fall right into a proposed greater enterprise charges band.
It argued that they had been already underneath important 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 information, a spokesperson for the Treasury mentioned: “We all know there’s extra to do to spice up progress, as a result of, while our economic system is not damaged, it does really feel caught.
“That is the results of years of underinvestment, which we’re decided to reverse via our Plan for Change.
“We’re making progress: progress this 12 months was the quickest within the G7; because the election, rates of interest have been reduce 5 instances, and actual wages have risen quicker than they did underneath the final authorities.
“There’s extra to do to construct an economic system that works for, and rewards, working individuals. That is why we’re slicing pointless crimson tape, reworking the planning system to get Britain constructing, and investing billions of kilos into reasonably priced 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 just lately hit a 27-year excessive – a damning vote of no confidence in Labour that makes painful tax rises all however sure.
“It’s little surprise that Starmer has stripped Reeves of management over the finances. However sidelining her shouldn’t be sufficient – he should additionally reject her failed financial method that has left Britain poorer.”
