The UK recorded zero growth in July, worse than economists had expected a small increase, also thwarting the growth ambitions of the Labour government.
Monthly gross domestic product (GDP) had already stagnated in June, the Office for National Statistics (ONS) said in its monthly report.
And while quarterly growth had increased between April and June, to 0.6%, continuing its rebound after a slight recession at the end of 2023, it had nevertheless slowed down compared to the previous quarter.
“I have no illusions about the scale of the challenge we face and I will be honest with the British people: change will not happen overnight,” British Chancellor of the Exchequer Rachel Reeves said in a statement.
Earlier on Wednesday, the government announced that US tech giant Amazon will invest £8 billion (€9.5 billion) in the cloud in the UK, a welcome windfall for the Labour majority elected in July, which has made boosting growth its priority.
The data released on Wednesday “does not mean the UK is on the brink of another recession,” commented Ruth Gregory, an analyst at Capital Economics.
“A slight slowdown in GDP growth to more normal rates of around 0.3%” over the coming quarters “is more likely than a sudden fall,” she said.
According to the PMI Flash index published at the end of August by S&P Global, private sector activity accelerated in August in the United Kingdom, even though growth seemed to weaken overall in the third quarter.
UK activity in July was weighed down by manufacturing, particularly carmakers, despite gains in the services sector, including computer programming and healthcare, the ONS said.
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