UK Economy Stalls in July, Bank of England Expected to Hold Rates

LONDON, Britain’s economy showed no growth in July, raising fresh concerns about the recovery as households and businesses continue to grapple with high costs.

Figures released by the Office for National Statistics (ONS) revealed that while the services sector registered modest growth, output from manufacturing and production fell, offsetting gains. Construction saw only a slight increase.

Economists say the stagnant figures make it unlikely the Bank of England will raise interest rates when it meets on 18 September. A Reuters poll of analysts suggests most expect the Bank to hold rates steady for the rest of the year, with a minority predicting a cut in the final quarter.

“Stagnation rather than contraction is not reassuring,” said Sarah Hall, a senior economist at the National Institute of Economic and Social Research. “It points to weak momentum at a time when households need relief.”

The Bank of England’s policy rate currently stands at 5.25%. While inflation has eased from last year’s highs, energy costs, housing pressures, and a soft retail sector remain a drag on growth.