UK economic growth stalled in July, raising further concerns about tax rises in the upcoming Autumn Budget.
The latest figures from the Office for National Statistics found monthly GDP showed no growth in July 2025, following growth of 0.4% in June.
On a quarterly basis, GDP grew by 0.2% in the three months to July compared with the three months to April, down from three-month-on-three-month growths of 0.3% in June and 0.6% in May.
Quarterly growth was largely supported by services output, which grew by 0.4% in the three months to July, the figures showed. However, production output fell by 1.3%, while construction output slowed to 0.6% from 1.2% growth in the three months to June.
The UK economy grew strongly in the first half of the year, making the UK the fastest-growing economy in the G7, but analysts had been widely expecting growth to slow in the second half. However, the data will raise questions about what the Chancellor will unveil in November’s Budget to boost the economy.
Lale Akoner, global market analyst at eToro, said: “After a strong first half, July’s stall shows how quickly momentum can fade when businesses and households are squeezed by rising costs and looming tax hikes.
“The risk is that fiscal tightening in November collides with a cooling labour market, amplifying pressure on demand. The reality is that without clearer productivity gains or investment incentives, the economy risks slipping back into a pattern of stagnation just as fiscal space narrows.”
Lindsay James, investment strategist at Quilter, commented: “We now face continuing uncertainty in the lead up to the budget in November given the precarious position the Chancellor finds the public finances in.
“Speculation is already rife about which taxes will be raised, and without the ability to raise the main revenue generators – income tax, national insurance and VAT – the Government is left with targeting multiple sectors for small amounts of revenue. This is increasing the headwinds for the UK economy and with still over two months to go, GDP readings for the second half of the year are unlikely to be pretty reading. For government under as much pressure as it is at the moment, this will be a very difficult corner to get itself out of.”
Ben Jones, lead economist at the Confederation of British Industry, added: “The Government cannot tax its way to growth and continue to raid corporate coffers. With the Autumn Budget fast approaching, the Chancellor must deliver a decisive, pro-growth package by committing to serious tax reform.
“It’s the structure of our system – from punitive business rates to the restrictive VAT threshold and stamp duty – that holds back economic progress, not just the rates themselves.”
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