Following the expected post-election recovery, the United Kingdom’s economy experienced a second consecutive month of stagnation in July.
After another month of consistent gross domestic output, the Office for National Statistics (ONS) reported that the pre-election deadlock occurred in June.
The underwhelming performance in Labour’s early weeks in power surprised the city, which had expected a gain of 0.2% for the month. This occurred even though the economy experienced a 0.5% growth in the three months leading up to July.
Following a 0.7% growth rate in the first quarter of 2024, the economy experienced a 0.6% expansion in the next quarter.
However, the most recent data from the Office of National Statistics (ONS) indicates that the recovery from the minor recession in late 2023 has slowed.
Additionally, market forecasts regarding the Bank of England’s possible second interest rate reduction during the policymakers’ meeting on September 19 have seen a slight increase, attributed to the second consecutive month of stagnant growth—the current official interest rate for borrowing stands at 5%.
The Office of National Statistics (ONS) indicates that GDP increased by 1.1% in the three months preceding July compared to the same period in 2023.
On the other hand, analysts asserted that the slowdown observed in June was temporary and driven by political uncertainty.
Despite the summer slowdown’s temporary nature, Linda James, an investment analyst at Quilter Investors, advised that Reeves approach her budget cautiously in the coming month.
Anna Leach, the Institute of Directors’ chief economist, emphasizes that the upcoming budget should convey a robust and optimistic message about growth.