The UK’s recovery from the recession last year risks becoming a dead cat bounce, with July GDP growth flatlining amid a slowdown in construction activity.
The data will be difficult reading for Prime Minister Keir Starmer, who is thought to be on the verge of unleashing a wave of tax changes that experts expect will curtail growth even further.
UK GDP was expected to grow 0.2% in July after producing zero growth in June. However, July also proved to be a major disappointment as the UK economy produced zero growth.
Slower construction activity was behind the dismal reading. Services did show some signs of positivity, but not enough to lift the entire economy.
“Having brushed aside the 2023 slowdown, the UK economy grew by 0.7% in the first quarter of 2024 and by 0.6% in the second. However, the third quarter has got off to an inauspicious start with no increase for July compared with June, which was also a flat month,” said Rob Morgan, Chief Investment Analyst at Charles Stanley.
“The year-on-year figure of 1.2% growth reflects a mild but bumpy upturn from the low point in the fourth quarter of 2023. Very slight overall growth over the past three months was salvaged by the service component with manufacturing and construction both in reverse.”