UK economy stagnates in July - ONS
By Abigail Townsend
Date: Friday 12 Sep 2025
(Sharecast News) - The UK economy stagnated in July, official data released on Friday showed, weighed down by weakness in the production sector.
According to the Office for National Statistics, there was no growth in the month of July, in line with consensus. GDP grew by a higher-than-expected 0.4% in June, and fell 0.1% in May.
However, in the three months to July - the ONS's preferred measure - GDP grew by 0.2%, down on June's 0.3% but in line with forecasts.
The services sector grew by 0.4% over the three months, while the construction sector expanded by 0.6%. In contrast, production fell 1.3%.
Liz McKeown, director of economic statistics at the ONS, said: "Within services, health, computer programming and office support services all performed well, while the falls in production were driven by broad-based weakness across manufacturing industries."
The UK economy grew by 0.7% in the first quarter and 0.3% in the second.
Chancellor Rachel Reeves, who presents her annual budget at the end of November, is battling sluggish economic growth and surging government spending alongside sticky inflation.
Matt Swannell, chief economic advisor to the EY Item Club, said: "Though July's reading was a better outcome than had appeared likely, the outlook contains few bright spots.
"GDP growth will likely be very modest in the third quarter and remain sluggish in the final months of this year, which would be consistent with the season pattern seen in recent years.
"The economy is expected to continue growth a sub-trend rates next year, with our pessimism largely based on the strength of domestic headwinds."
Derren Nathan, head of equity research at Hargreaves Lansdown, said the data provide "further challenge to Reeves to plug the UK's funding gap without stalling the economy in the budget".
The Bank of England next meets to discuss interest rates on 18 September. However, despite the sluggish economic growth, no change is expected, putting further pressure on the chancellor.
Richard Hunter, head of markets at Interactive Investor, said: "With the BoE's hands largely tied, given the current levels of inflation, the obvious solution of a further round of interest rate cuts seems a forlorn hope for now.
Separately, the ONS also released an update on the UK's imports and exports for July.
The value of goods imports rose by 5.4% during the month, to £51.8bn, while goods exports rose 6.6% at £30.6bn.
The total goods and services trade deficit widened by £0.4bn to £10.3bn in the three months to July, after total imports rose by more than exports during the period.
Kathleen Brooks, research director at XTB, said: "The falls in production were broad-based [in July], which suggests that a mixture of tariff concerns and a higher tax burden for business is now having a material effect on the economy.
"Exports to the US remain below their pre-tariff rate, a sign that Donald Trump's policies, although ostensibly fairer to the UK, are still wreaking havoc with the UK's economy."
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