UK economy unexpectedly stalls again in July, dealing blow to new government
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The Labour Party, led by Prime Minister Keir Starmer, is counting on growth to repair the public finances.
PHOTO: AFP
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LONDON - Britain’s economy stalled again in July, official data showed on Sept 11, dealing a blow to the new Labour government that has put growth expansion at the top of its priority list.
Gross domestic product (GDP) showed zero growth in the reported month compared with June, when output also flattened, the Office for National Statistics said in a statement.
Economists were forecasting a 0.2 per cent increase.
Declines in production and construction were offset by services and a rebound in retail sales.
The British economy outpaced all of its Group of Seven (G-7) peers in the first half with an expansion of 1.3 per cent.
Its performance in the second half is expected to be significantly weaker, however, with the Bank of England and private-sector economists forecasting growth of 0.3 per cent on average in the third and fourth quarters.
“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,” Finance Minister Rachel Reeves said in response to the data.
“Two quarters of positive economic growth does not make up for 14 years of stagnation.
“That is why we are taking the long-term decisions now to fix the foundations of our economy.”
The Labour Party, which swept to victory in the July general election, is counting on growth to repair the public finances and deliver the boost to living standards promised to voters. Prime Minister Keir Starmer has pledged the fastest sustained growth in the G-7 by reforming the planning system and lifting investment, a lofty commitment after more than a decade of feeble productivity gains.
The new government was boosted overnight by news that US tech giant Amazon is to invest £8 billion (S$13.6 billion) in Britain over the next five years, creating thousands of jobs via its web services arm.
“We are taking the long-term decisions now to fix the foundations of our economy, including today’s announcement... from Amazon Web Services, that will help rebuild Britain and make every part of the country better off,” Ms Reeves added.
The investment – to build, operate and maintain data centres in Britain – could contribute £14 billion to the country’s GDP and support more than 14,000 jobs annually across the supply chain, Amazon said. AFP, BLOOMBERG
