The UK economy remained stagnant in July, marking the second month in a row with no growth, according to the latest Office for National Statistics (ONS) data. Economists had predicted a 0.2% rise for July, but activity flatlined, following a similar slowdown in June.
Although the economy expanded by 0.5% over the three months leading to July, the weaker-than-expected performance during Labour’s initial weeks in Government surprised financial analysts. Growth had been more robust earlier in the year, with a 0.7% rise in the first quarter and 0.6% in the second quarter of 2024. However, the recovery from the mild recession at the end of 2023 appears to have stalled.
Despite the current slowdown, the Organisation for Economic Co-operation and Development (OECD) has revised its growth forecasts for the UK, citing a stronger-than-anticipated economic performance in the first half of the year. The OECD expects the UK economy to grow by 1.1% in 2024 and 1.2% in 2025.
However, the OECD has advised the Government to prioritise tax reforms in the upcoming budget to address the economic challenges of high interest rates and low growth. With two months of flat growth, expectations have increased that the Bank of England (BoE) may cut interest rates again at its next meeting on 19 September, with the current rate standing at 5%.
Talk to us about your business.
