UK financial system flatlines in July for the second month in a row

The UK economy flatlined in July for the second month in a row, according to the latest official figures.

The Office for National Statistics (ONS) said gross domestic product (GDP) recorded no growth in July.

Economists had been expecting GDP to edge up by 0.1 per cent in the month, according to a consensus provided by Pantheon Macroeconomics.

The UK held a general election at the beginning of the month, which some recent surveys have suggested led to an increase in activity with businesses holding out for political stability.

The Office for National Statistics said gross domestic product recorded no growth in July

The latest data comes after the economy continued its recovery from recession at the end of last year, with growth of 0.6 per cent between April and June.

It showed the country was turning a corner after dipping into a technical recession, which is defined as two consecutive quarters of negative growth.

But hopes of a stronger recovery could falter after two months of stagnating growth.

Chancellor Rachel Reeves said: ‘I am under no illusion about the scale of the challenge we face and I will be honest with the British people that change will not happen overnight.

‘Two quarters of positive economic growth does not make up for fourteen years of stagnation. That is why we are taking the long-term decisions now to fix the foundations of our economy.’

Chancellor Rachel Reeves, pictured with Prime Minister Sir Keir Starmer in Swindon in July, said today that she is ‘under no illusion about the scale of the challenge we face’

The ONS’s data showed that the services sector increased by 0.1 per cent in July, but by 0.6 per cent across the three months to July.

The accommodation and food and beverages category ticked up by 0.9 per cent, with accommodation, including hotels, the biggest contributor with 2.2 per cent growth recorded during the month.

ONS director of economic statistics Liz McKeown said: ‘The economy recorded no growth for the second month running, though longer term strength in the services sector meant there was growth over the last three months as a whole.

‘July’s monthly services growth was led by computer programmers and health, which recovered from strike action in June. These gains were partially offset by falls for advertising companies, architects and engineers.

‘Manufacturing fell, overall, with a particularly poor month for car and machinery firms, while construction also declined.’