Britain’s economic system stalled once more in July, official knowledge confirmed Wednesday, dealing a blow to the brand new Labour authorities of Prime Minister Keir Starmer that has put development enlargement on the prime of its precedence checklist.
The economic system stagnated for a second month as manufacturing output dropped sharply, and development was additionally mired in a downturn.
Economic output confirmed no change in month-on-month phrases in July, because it did in June, knowledge from the Office for National Statistics (ONS) confirmed on Wednesday.
Analysts had predicted a slight uplift in development for July, whereas earlier knowledge confirmed the U.Ok. economic system grew at a barely slower tempo within the second quarter in contrast with the primary.
A Reuters ballot of economists had pointed to a 0.2% month-on-month enlargement of gross home product (GDP). A consensus supplied by Pantheon Macroeconomics anticipated a modest 0.1% enlargement.
The figures are unlikely to sway expectations that the Bank of England (BoE) will lower rates of interest as soon as extra this 12 months, in all probability in November somewhat than on Sept. 19.
Sterling edged decrease towards the greenback and buyers assigned a roughly 25% likelihood of a fee lower at subsequent week’s assembly, barely larger than on Tuesday.
Modest development within the providers sector, which expanded by 0.1% in July, was offset by declines in manufacturing and development.
ONS Director of Economic Statistics Liz McKeown mentioned: “The economic system recorded no development for the second month working, although long term energy within the providers sector meant there was development during the last three months as a complete.
“July’s month-to-month providers development was led by laptop programmers and well being, which recovered from strike motion in June. These good points have been partially offset by falls for promoting firms, architects and engineers.
“Manufacturing fell, overall, with a particularly poor month for car and machinery firms, while construction also declined.”
Hailey Low, affiliate economist on the National Institute of Economic and Social Research assume tank, mentioned the economic system was more likely to develop by way of the second half of 2024, albeit at a slower tempo than early within the 12 months when it rebounded from a shallow recession.
“All eyes will undoubtedly be on the upcoming (budget), especially for any policies critical to delivering sustained long-term economic growth – an agenda promised by the Labour government,” Low mentioned.
In response to Wednesday’s knowledge, Finance Minister Rachel Reeves mentioned she was underneath no phantasm in regards to the scale of the problem Britain confronted and mentioned “change would 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,” she added in a press release.
She pointed to the announcement on Wednesday that Amazon Web Services (AWS) plans to spend 8 billion kilos ($10.45 billion) within the United Kingdom over the following 5 years to construct knowledge facilities as a purpose for optimism.
Britain’s economic system has grown slowly because the COVID-19 pandemic, increasing simply 2.3% between the fourth quarter of 2019 and the second quarter of 2024.
Economic output in July was 1.2% larger than its degree in July 2023, the ONS mentioned – decrease than the 1.4% development predicted by economists.
Starmer mentioned he wished the economic system to realize annual development of two.5% when campaigning within the run-up to July 4’s election – a fee that Britain has not commonly reached since earlier than the 2008 monetary disaster.
Separate commerce knowledge for July confirmed a pointy fall in items exports to each European Union and non-EU international locations. Services exports grew solely marginally.
After adjusting for inflation, items exports to non-EU international locations fell to their lowest degree since May 2020. Outside of the COVID-19 pandemic, it was the bottom studying since September 2011.
Source: www.dailysabah.com