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UK Economy Stagnates in July, Falling Below Expectations

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The U.K. economy stagnated again in July, showing no month-on-month growth, according to flash figures released by the Office for National Statistics (ONS) on Wednesday. This flatlining performance followed a similar outcome in June, as the nation’s GDP came in lower than the 0.2% growth forecasted by economists.

The slight growth in Britain’s dominant services sector, at 0.1%, was overshadowed by declines in other key areas. Production output dropped by 0.8%, and construction saw a fall of 0.4%. These figures mark a challenging period for the U.K., as it faces sluggish economic growth, with GDP rising by just 0.5% in the three months leading up to July, compared to 0.6% in the previous quarter ending in June.

Liz McKeown, director of economic statistics at the ONS, noted, “The economy recorded no growth for the second month running, though longer-term strength in the services sector meant there was growth over the last three months as a whole.”

This period of stagnation comes after modest but steady growth earlier in the year, following the country’s emergence from a shallow recession at the start of 2024. Despite this initial recovery, the economy’s current performance signals persistent challenges.

The July data also marks the first economic figures under the leadership of Prime Minister Keir Starmer’s new Labour government, which was elected on July 4. These numbers come at a critical time, as the Bank of England is set to meet next week to make its latest interest rate decision. Last month, the central bank cut rates for the first time in four years, a move aimed at stimulating economic activity amidst ongoing uncertainty.

 

UK’s Starmer and Germany’s Scholz Aim to Strengthen Ties in Post-Brexit Reset

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UK Prime Minister Keir Starmer and German Chancellor Olaf Scholz met in Berlin on Wednesday to discuss deepening bilateral relations as part of a broader post-Brexit reset. The leaders focused on key areas such as energy security, defense, climate change, and economic cooperation. Both countries emphasized the importance of a strong partnership for economic growth and addressed an action plan for illegal migration.

In a joint statement, the UK and Germany highlighted the need to elevate their bilateral relationship to a new level, reflecting their close partnership within Europe. Key priorities for the collaboration include industrial transformation, tackling illegal migration, enhancing people-to-people contacts, and advancing in education, infrastructure, technology, research, and innovation. A formal agreement is expected to be signed early next year.

Scholz described the UK and Germany as “special partners,” while Starmer emphasized the importance of building on their already strong relationship. Since taking office in July, Starmer has prioritized resetting the UK’s relationships with European countries. His visit to Berlin is part of a broader trip to Germany and France to engage with political and business leaders.

Starmer expressed a commitment to taking advantage of the “once in a generation opportunity” to redefine the UK’s relationship with Europe, addressing the challenges left by Brexit and previous government policies.