LONDON – The British economy continued to stagnate in July on a monthly basis, according to preliminary figures released Wednesday by the Office for National Statistics.

Gross domestic product (GDP) was below expectations of economists polled by Reuters, who had expected growth of 0.2%.

The country also did not record GDP growth in June.

Britain’s dominant services sector showed a slight increase of 0.1% in July, while manufacturing and construction output fell by 0.8% and 0.4% respectively.

Britain’s economic growth rose 0.5% in the three months to July, slightly below economists’ expectations and the 0.6% recorded in the second quarter ended June.

“The economy has not recorded growth for two consecutive months, although the long-term strength of the services sector means there has been growth in the last three months overall,” said Liz McKeown, ONS director of economic statistics.

The UK economy has posted moderate but steady expansion almost every month so far this year, after recovering from a shallow recession At the beginning of the year.

The reading is the first under the new Labour government led by Prime Minister Keir Starmer. elected on July 4th.

Finance Minister Rachel Reeves said the data “leaves no illusions” about the challenges facing the UK economy.

“I will be honest with the British public that change will not happen overnight. Two quarters of positive economic growth cannot replace 14 years of stagnation,” Reeves said.

The announcement comes ahead of the upcoming Autumn Statement on October 30, when Reeves will unveil his annual budget. He has warned it will be painful after he said he inherited 22 billion pounds ($29 billion). hole The previous Conservative government denied the allegations and called the black hole theory “fiction”.

Lindsay James, investment strategist at Quilter Investors, said the prospect of tax hikes could add caution to consumer spending in the coming months.

“Tax rises were warned about ahead of the Autumn Budget, and consumers and businesses may be feeling more cautious heading into the winter months as they await the detail from Treasury,” he said.

But he added that further interest rate moves planned by the Bank of England could help ease broader growth pressures. The central bank meets next week to take its final monetary policy decision. tariff cuts for the first time in four years last month.

“But this month, it may be just a blip, given the positive news we are hearing about the broader state of the economy, especially as interest rate cuts continue to be in place next year,” James said.