Overview
- The Office for National Statistics reported on Friday that GDP grew by 0.4% in July, three‑month growth was 0.4% and annual GDP rose 1.6%.
- Growth was concentrated in services, with computer programming and AI‑related IT activity named by the ONS as the single largest contributor to the monthly gain.
- Production and construction weakened, each falling about 0.5% over the three months to July, showing the expansion is narrow and uneven across the economy.
- Markets reacted calmly with the pound up roughly 0.1%, while economists warned the July uplift could be erased by higher energy bills, rising gilt yields and the Middle East conflict, all of which squeeze household budgets and government borrowing costs.
- The data gives Chancellor John Healey limited short‑term relief but does not expand fiscal headroom meaningfully and will sharpen focus on policy choices at the late‑October Budget and the Bank of England’s next decisions on interest rates.