UK economy loses momentum in July

Britain’s economy stagnated in July, with growth flat after a sharp decline in factory output. The figures aligned with expectations for a softer start to the second half of 2025, though they proved disappointing for the government ahead of November’s budget.

Data showed GDP in July was 1.4% higher than a year earlier, the same pace as June but just under the 1.5% growth projected in a Reuters poll.

Manufacturing, representing 9% of the economy, recorded its steepest drop in a year, down 1.3% as output fell in computers, electronics, and pharmaceuticals. In contrast, the dominant services sector managed a modest 0.1% gain, slightly above forecasts.

Economists anticipate weaker momentum in the coming months as US tariffs pressure global trade, while domestically, inflation and looming tax increases pose further challenges.

The Finance Minister insisted the economy is not broken but acknowledged it feels stuck. Analysts see July’s stall as a possible warning of tighter conditions ahead, with inflation and job losses likely to weigh on activity in August, despite potential support from warmer weather.