The British economy stagnated in July, with gross domestic product showing no growth compared to the previous month, according to official data released by the Office for National Statistics. The flat reading follows a 0.4 percent expansion in June and highlights a weakening economic trend at the start of the third quarter. Output across key sectors showed uneven performance.
The manufacturing sector saw the sharpest monthly decline since July 2024, contracting by 1.3 percent. Production as a whole fell by 0.9 percent, weighed down by decreased output in pharmaceuticals and computer, electronic and optical products. This marked the third consecutive monthly decline in production activity. The services sector, which accounts for about 80 percent of the UK economy, posted a marginal increase of 0.1 percent in July.
Growth in areas such as human health and social work, and transportation and storage, was partially offset by declines in consumer-facing services including retail trade and the repair of motor vehicles. The construction sector grew by 0.2 percent, driven by residential building activity and maintenance work. Over the three months to July, GDP rose by 0.2 percent compared with the previous three-month period.
That is a slower pace than the 0.3 percent growth recorded in the second quarter of 2025. On a year-over-year basis, the economy expanded by 1.4 percent in July, slightly below economists’ expectations of a 1.5 percent increase. Monthly construction growth came from new housing projects, particularly in private-sector housing. Repair and maintenance activity remained flat.
Manufacturing contracts as output weakens
The overall increase in construction output was supported by ongoing development in infrastructure and commercial property. In services, transportation and storage was the largest contributor to monthly growth, rising by 1.4 percent. This included strength in warehousing, support services for transport, and land transport. Health services also expanded, as there was less industrial action compared to earlier months.
However, wholesale and retail trade, which includes motor vehicle sales and repairs, contracted in July. While headline GDP growth was flat, revisions to past data revealed a trend of slowing momentum. The last three three-month periods have shown weakening growth. The services sector increased 0.4 percent over the three months to July, but the production sector declined 1.3 percent over the same period.
Construction rose 0.6 percent during that time. The Office for National Statistics noted that its estimates are based on a range of monthly indicators and are subject to revision as more comprehensive data become available. The GDP figures are an early indicator of economic performance and are closely watched by financial markets and policymakers.
Annual GDP growth slightly below forecast
The UK economy has faced several headwinds in recent months, including persistent inflation, tight financial conditions, and weakening industrial activity. Official inflation data released earlier showed that consumer prices rose by 3.8 percent in July, up from 3.6 percent in June, driven by food, energy and services. Labour market data released this week showed the UK unemployment rate ticked up to 4.4 percent, the highest level since the end of 2021.
Vacancies continued to decline, suggesting employers remain cautious about hiring amid economic uncertainty. The Bank of England maintained its benchmark interest rate at 4.0 percent in its most recent decision, citing the need to balance inflation control with the risk of slowing growth. Economic data for the coming months will determine whether the UK avoids a broader contraction. For now, the stagnation in July signals limited momentum as the economy enters the second half of 2025. – By EuroWire News Desk.