UK Economy Stagnates July Highlighting Growth Slowdown

The UK economy showed no growth in July 2025, marking a slowdown from 0.4% growth in June and signaling a tepid start to the third quarter amid rising economic headwinds. Despite a strong first half of the year that made the UK the fastest-growing G7 economy, the latter half now faces a slowdown due to factors including tax rises, tariffs, and a correction in trade and public spending. Services and construction saw modest gains, but these were offset by a 0.9% decline in manufacturing output. Business groups have attributed the slowdown partly to Chancellor Rachel Reeves's policies, such as a £25 billion increase in employer national insurance contributions and a rise in the national living wage, which may constrain growth further. Inflation also rose unexpectedly to 3.8% in July, reducing expectations for interest rate cuts by the Bank of England, which is expected to maintain the base rate at 4%. The slowdown raises concerns about Labour's economic promises and the need for potentially tougher fiscal measures in the upcoming budget.