UK economy flatlines again in July, below expectations

• The U.K. economy continued to flatline in July on a month-on-month basis, flash figures published from the Office for National Statistics showed Wednesday. Gross domestic product (GDP) also came in below the expectations of economists polled by Reuters, who had forecast growth of 0.2%. The country also logged no GDP growth in June.
• Britain’s dominant services sector showed slight growth of 0.1% in the month to July, while production and construction output fell by 0.8% and 0.4%, respectively. Britain’s economic growth was up 0.5% in the three months to July, slightly below economist expectations and the 0.6% recorded in the second quarter ending in June.
• “The economy recorded no growth for the second month running, though longer term strength in the services sector meant there was growth over the last three months as a whole,” Liz McKeown, director of economic statistics at the ONS, said. The U.K. economy has recorded modest but steady expansion almost every month so far this year, having emerged from a shallow recession at the start of the year.
• Lindsay James, investment strategist at Quilter Investors, said the prospect of tax raises could add further caution to consumer spending over the coming months.
• “Tax rises have been flagged ahead of the Autumn Budget, and consumers and businesses may feel rather more cautious heading into the winter months as they await details from the Treasury,” she said. She added that further movement in interest rates anticipated from the Bank of England could help ease wider growth pressures. The central bank is set to meet next week for its latest policy decision after cutting rates for the first time in four years last month.

(Source: Reuters)