UK economy flatlines in July in grim news for Rachel Reeves
The UK economy flatlined in July, according to official figures, in grim news for Rachel Reeves as she gears up for a challenging budget.It was a slowdown compared with June, when the economy grew by 0.4%, according to the Office for National Statistics.GDP expanded strongly in the first half of the year, making the UK the fastest-growing economy in the G7, but it had been widely expected to slow in the second half.The ONS said that growth in the services and construction sectors in July was offset by a 0.
9% fall in the production sector, which includes manufacturing.The downbeat data will raise questions about Labour’s promise to kickstart the economy.A Treasury spokesperson said: “We know there’s more to do to boost growth, because, whilst our economy isn’t broken, it does feel stuck.That’s the result of years of underinvestment, which we’re determined to reverse through our plan for change.”The ONS said that GDP grew by 0.
2% in the three months to July, compared with the three months to April, down from 0,3% in the three months to June,Statisticians see three-month figures as a better guide to the underlying health of the economy than one-month data, which tends to be more volatile,The ONS director of economic statistics, Liz McKeown, said: “Growth in the economy as a whole continued to slow over the last three months,While services growth held up, production fell back further.
“Within services, health, computer programming and office support services all performed well, while the falls in production were driven by broad-based weakness across manufacturing industries.”The pound weakened after the news, to trade 0.2% lower at $1.355 against the US dollar by mid-morning in London.Business groups have blamed Reeves’s £25bn increase in employer national insurance contribution, which came into force in April alongside a significant rise in the national living wage, for constraining growth.
The British Chambers of Commerce (BCC) responded to the data by warning Reeves against levying more taxes on business,Stuart Morrison, the BCC’s research manager, said: “The business landscape remains challenging, particularly for SMEs [small and medium-size enterprises], with cost pressures impacting investment, recruitment and trade,“The government has acknowledged it has asked a lot of business in the past year,Our message is now clear – there must be no more taxes on business in the autumn budget,”Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionThe chancellor is widely expected to have to present a package of tax increases when she delivers her second budget on 26 November, to compensate for an anticipated downgrade in the Office for Budget Responsibility’s forecasts.
However, after the news of zero growth in July, economists warned that speculation about tax increases was likely to continue weighing on confidence.Fergus Jimenez-England, an associate economist at the National Institute of Economic and Social Research, said: “Economic activity in the third quarter will be constrained by fiscal uncertainty weighing on household and business sentiments.Growth at this pace will do little to ease the fiscal challenges confronting the chancellor this autumn.”Daisy Cooper, the Liberal Democrats’ Treasury spokesperson, said: “The government talks of going full-throttle on growth but the reality is they have left the handbrake on.“Their growth-crushing jobs tax risks hollowing out our high streets and ministers’ refusal to jettison their shortsighted red lines on cutting red tape with Europe is holding back our exporters.
”Trade data published alongside the GDP update showed the UK’s goods deficit widening by £3bn in the three months to July, to £61.9bn.The ONS said exports to the US rose by £800m in July but had not returned to the levels seen before Donald Trump’s tariffs were imposed.The slowdown in economic growth comes alongside higher-than-expected inflation, which jumped to 3.8% in July, prompting investors to rein in expectations of further interest rate cuts from the Bank of England in the coming months.
The Bank’s nine-member monetary policy committee is expected to leave rates on hold at 4% when it meets next Thursday.Jobs and inflation data, due to be published earlier in the week, will give more detail of the state of the economy – though policymakers have repeatedly warned that known flaws in ONS data are making it difficult to get a clear picture.
Stagnant GDP shows scale of challenge for Rachel Reeves at autumn budget
“Our economy isn’t broken, but it does feel stuck,” is the message from Rachel Reeves.Having made rebooting the economy the No 1 priority for government, it is a brutally honest assessment from a chancellor more than a year into the job.The latest GDP figures, released on Friday, highlight the scale of the challenge for Reeves at her autumn budget. Growth flatlined in July, slowing from 0.4% in June, as the economy struggled for momentum over the summer
Britain is ‘a terrible place’ to sell medicines, says drug firm executive
A senior pharmaceuticals executive has called on the government to come up with a “proper” roadmap for raising spending on new medicines, saying Britain is “not a good place” to develop or sell drugs.Paul Naish, the UK head of market access for the French company Sanofi, said Britain was “at a critical point”.He added: “We’ve still got the best universities, we’ve got some of the best scientists in the world, but it’s not a good place to do the development work for medicines. It’s an expensive place to operate, and it’s a terrible place to sell medicines.”The drugmaker MSD, known as Merck in the US, this week ditched its under-construction £1bn research centre in London
Business rates rise would put hundreds of big shops at risk, say UK retailers
Up to 400 large shops are at risk of closure with as many as 100,000 jobs at risk if the government goes ahead with plans to hit stores with higher business rates, retailers have warned.Some of the UK’s largest retail premises, including supermarkets and department stores, would face higher property tax charges under new rules being considered by the government before November’s budget.The higher charges for larger sites, including warehouses, offices and other premises, are intended to pay for discounts for smaller business properties, such as independent retailers, cafes and pubs, after the Labour government pledged to make the business rates system fairer.The bosses of big retailers including John Lewis, Lidl and B&Q met the chancellor, Rachel Reeves, last week to ask her to exclude retail from the surcharge.The new rules are targeted at all business premises with a rateable value – a figure linked to rents – of more than £500,000
MPs raise concerns over Asda’s link to app offering high-interest loans to staff
An influential group of MPs has sought assurances that Asda is not “squeezing staff” to drive profit after it emerged they are being offered high-interest loans by Wagestream, a company in which the retailer’s owner has a stake.The business and trade select committee has written to Asda over its links to the “financial wellbeing app” that recently began offering the supermarket’s staff loans of up to £25,000. The default arrangements for Wagestream’s “workplace loans” involve debt repayments being directly deducted from workers’ pay packets.A holding company controlled by Asda’s private equity owner TDR Capital is a shareholder in Wagestream, which has been offering Asda workers a range of other services, including savings pots and wage advances, since 2023.Documents filed at Companies House show that the holding company, Bellis Financial Investments 2, is one of a number of shareholders in Wagestream, alongside former Wonga payday loan investor Balderton Capital, and social impact investors including the Joseph Rowntree Foundation via the Fair by Design Fund
Paramount Skydance reportedly preparing takeover bid for Warner Bros Discovery
Paramount Skydance is reportedly preparing a takeover offer for Warner Bros Discovery, in a bid to pull together two of the largest US legacy media conglomerates and Hollywood movie studios.Less than a month after Skydance, a production firm run by David Ellison, son of the billionaire tech mogul Larry Ellison, closed its merger with Paramount, the firm is considering other blockbuster deals.Combining Paramount with WBD would reshape the US entertainment and media industry, shifting prominent brands in TV, cinema and news – from South Park and Superman to CNN and 60 Minutes – together for the first time.Paramount is preparing a majority cash bid for WBD that would be backed by the Ellison family, according to the Wall Street Journal, which cited unnamed sources familiar with the situation. Paramount and WBD did not immediately respond to requests for comment
UK must heed Sir John Bell’s big pharma investment warning
Compare and contrast. Here is the opening line in the government’s response to news that the US pharmaceutical company Merck is scrapping its £1bn research centre in King’s Cross in London because it thinks the UK is not an internationally competitive venue. Whistling cheerfully, the Department for Science, Technology and Innovation managed to claim: “The UK has become the most attractive place to invest in the world.”And here is Sir John Bell, former regius professor of medicine at the University of Oxford and all-round grand guru of life sciences in the UK. He told Radio 4 he had spoken to several chief executives of large pharmaceutical companies in the past six months “and they’re all in the same space, and that is, they’re not going to do any more investing in the UK”
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