Story perspectives

UK Economy Stagnates Amid Rising Inflation and Costs

9/12/2025

Summary

Story summary

The UK economy stagnated in July after a 0.4% growth in June, as reported by the Office for National Statistics (ONS).
GDP increased by 0.2% in the three months to July, down from 0.3% in the prior quarter.
Growth in services and construction was countered by declines in production.
Business groups cite Rachel Reeves's £25bn national insurance increase and rising living wage as factors in the slowdown.
Inflation rose to 3.8% in July, influencing the Bank of England's interest rate expectations, likely keeping rates at 4%.

History

Historical Context

The UK's economic struggles trace back to the 2008 financial crisis, which caused a GDP contraction of 4.2%. In response, the Bank of England lowered interest rates to a historic low of 0.5%. Today, rising inflation at 3.8% and national insurance increases echo past challenges, raising concerns about fiscal policy and its impact on growth, businesses, and consumers.

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Story summary

The UK economy stagnated in July after a 0.4% growth in June, as reported by the Office for National Statistics (ONS).
GDP increased by 0.2% in the three months to July, down from 0.3% in the prior quarter.
Growth in services and construction was countered by declines in production.
Business groups cite Rachel Reeves's £25bn national insurance increase and rising living wage as factors in the slowdown.
Inflation rose to 3.8% in July, influencing the Bank of England's interest rate expectations, likely keeping rates at 4%.

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