Britain's Economic Stagnation: Navigating Gloomy Growth Prospects
In July, Britain's economy saw stagnation after a June rise. First-half 2025 growth was notable, partly due to increased government spending. However, second-half growth is expected to slow due to tariffs and a weakened labor market. Finance Minister Rachel Reeves aims for pro-growth measures ahead of the annual budget.
- Country:
- United Kingdom
In a surprising turn, Britain's economy stagnated in July, following a vigorous 0.4% growth in June, according to official figures published on Friday. This stagnation was expected, as economists had previously forecast zero growth for the month.
The first half of 2025 showed robust growth by recent standards, with the economy growing by 0.7% in the first quarter and 0.3% in the second. This growth was partly driven by high government spending and exporters rushing to ship goods before the implementation of U.S. tariffs. However, economists predict a slowdown in growth in the latter half of the year due to the impact of tariffs on global demand and a weakening labor market.
Finance Minister Rachel Reeves acknowledged the current economic challenges, stating that Britain's economy is not broken, but it feels stagnant. In anticipation of her annual budget on November 26, she aims to introduce pro-growth measures. Meanwhile, some businesses remain hesitant to hire or invest, awaiting clarity on forthcoming employment legislation and potential tax hikes.
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