The UK economy ground to a halt in July, with growth flatlining at 0% as businesses and households tighten their belts ahead of Chancellor Rachel Reeves’ tax-raising Budget.
Economic growth slowed to 0.2% in the three months to July, down from 0.3% in the previous quarter, according to data from the Office for National Statistics (ONS). The sluggish performance paints a grim picture for the Chancellor as she prepares for her November 26 Budget.
Liz McKeown of the ONS said: “Growth in the economy as a whole continued to slow over the last three months. While services growth held up, production fell back further.”
The stagnation was largely driven by a 1.3% drop in manufacturing output during July, with declines seen across sectors like electronics and pharmaceuticals. Economists warn the UK’s economy is set to slow further in the second half of 2025 as households and businesses cut back on spending and investment.
Yael Selfin, chief economist at KPMG UK, said: “Economic activity is expected to slow in the second half of the year as the temporary factors which pushed up growth in the first half of 2025 begin to fade.”
Concerns over trade tensions and global headwinds are weighing on the UK’s economic outlook, with businesses and lobby groups urging the Chancellor to avoid further tax hikes in the Autumn Budget that could stifle growth.
