UK economy flatlines again in July, below expectations

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