Crisis for Rachel Reeves as UK economy completely fails to grow

The UK econonmy flatlined in July in a fresh blow to Chancellor Rachel Reeves and Labour. There was no growth in gross domestic product (GDP) last month after after 0.4% expansion in June, according to the Office for National Statistics.

The stagnation came after the manufacturing sector saw activity pull back by 1.3% — the biggest contraction since July 2024. This held back growth in the wider economy, with the services sector up 0.1% thanks to expansion of 0.6% for retail and construction growing 0.2%. Responding to the news, the Tories claimed Ms Reeves' economic strategy has "left Britain poorer".

Liz McKeown from ONS said: “Falls in production were driven by broad-based weakness across manufacturing industries.”

In response to the latest GDP data, 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.

“We’re making progress: growth this year was the fastest in the G7; since the election, interest rates have been cut five times and real wages have risen faster than they did under the last government.

“There’s more to do to build an economy that works for, and rewards, working people.”

The ONS said real GDP grew by 0.2% in the three months to July 2025 compared with the three months to April 2025 but down from three-month-on-three-month growths of 0.3% in June 2025 and 0.6% in May 2025.

Shadow Chancellor Mel Stride said: "Growth is slowing with none in the latest month while the Government remains distracted from the problems the country is facing.

"While the Government lurch from one scandal to another, borrowing costs recently hit a 27-year high — a damning vote of no confidence in Labour that makes painful tax rises all but certain.

"It is little wonder that Starmer has stripped Reeves of control over the budget. But sidelining her is not enough – he must also reject her failed economic approach that has left Britain poorer."

GDP is used as an economic health indicator, with growth — or a lack of — used to measure economic progress.

It measures how much is produced, how much is spent and how much is earned in the economy over a given period and, also, how this changes over time.

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