There was no growth in the UK economy in July, official figures show.

It’s the second month of stagnation, the Office for National Statistics (ONS) said as GDP – the measure of everything produced in the UK – flatlined in the weeks following the election of the Labour government.

The flatline was not expected by economists, who had anticipated growth.

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Economists polled by the Reuters news agency forecast the economy would expand by 0.2%.

Some signs of growth

But there’s “longer-term strength” in the services sector meaning there was growth over the last three months as a whole and 0.5% expansion in the three months up to July.

Among the G7 group of industrialised nations, the UK had the highest growth rate for the first six months of 2024.

Why stagnation?

While there was growth in the services sector, led by computer programmers and the end of strikes in health, these gains were offset by falls for advertising companies, architects and engineers.

Manufacturing output fell overall due to “a particularly poor month for car and machinery firms”, the ONS said, while construction also declined.

What will it mean for interest rates?

Market expectations are for interest rates to remain unchanged by the Bank of England when they meet next week to consider their next move in the fight against inflation.

The central bank had raised the rate and made borrowing more expensive to reduce inflation.

A cut in November, at the next meeting of rate-setters, is expected. Rates are forecast to be brought down to 4.75% at that point.

Political reaction

In response to the figures Chancellor Rachel Reeves said:

“I am under no illusion about the scale of the challenge we face and I will be honest with the British people that change will not happen overnight. Two-quarters of positive economic growth does not make up for 14 years of stagnation.

“That is why we are taking the long-term decisions now to fix the foundations of our economy.”

If you want a sense of the “change” government, Sir Keir Starmer becoming the first prime minister in 15 years to address the Trade Union Congress is it.

The Tories out and Labour in is what the trade union movement has yearned for. This has been a patient base, waiting for a new deal.

But in the conference hall in Brighton, the mood was far from euphoric.

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Delegates seemed subdued. Yes, they welcomed the Labour prime minister’s pledge to overturn restrictive union laws and improve workers’ rights.

But the biggest cheer in the hall wasn’t for the leader on the stage, but the delegate who asked Sir Keir what he was going to do to alleviate child poverty, given he is not scrapping the two-child benefit cap.

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Afterwards, when I spoke to union bosses Sharon Graham of Unite and Mick Lynch of the RMT, the message was similar – think again on cutting winter fuel allowance for most pensioners.

This might be a Labour prime minister, but his message about improving union power or workers’ rights is being drowned out by warnings over “tough decisions” around future public sector pay settlements and spending cuts.

Downing Street is not backing down. There will be no reversal over the winter fuel decision.

The only slight chink I noted on Tuesday was when one senior insider told me there was “no plans” for mitigation measures amid the backlash. That is not, in my book, a firm no.

But if you ask loyal cabinet ministers, they tell me the “first line on the first page of the manifesto is our commitment to economic stability”, adding: “We are all really clear economic trust was a key reason we won.”

However, many in the Labour movement – like Mr Lynch and Ms Graham – heard another pledge from Labour too: there will be no return to austerity.

“They told us they would end austerity and wouldn’t bring in these measures,” said Mr Lynch. “And the first measure they seem to have done, which has hit the headlines, is an austerity step.

“So he’s going to have to think about that and get back onside with the rest of the Labour movement.”

Ms Graham simply said that Sir Keir had picked the pockets of pensioners instead of the wealthy, “and that was the wrong choice to make”.

The tension between “economic stability and tough choices” versus austerity is only going to grow as we head into the budget and beyond.

Sir Keir won the vote on withdrawing winter fuel allowance, but 52 MPs abstained. That tells you all you need to know – that these divisions are opening up so soon after that massive landslide.

Number 10 does not appear to want to fan the flames any further, with dozens of MPs slipped – sources in government are keen to stress there were but a dozen unauthorised abstentions – to avoid the vote entirely.

A “change government”, beset by infighting from the off, is not the impression this prime minister wants to give the country.

But this week’s TUC and winter fuel rebellion is a reminder the honeymoon for what was already a loveless landslide is well and truly over.

All Sir Keir can hope for is that the country will give him the benefit of the doubt, even if his base might not.

Presenter and author Carol Vorderman has called on the prime minister to apologise over cutting winter fuel payments for pensioners.

The controversial policy was approved by parliament today, despite a number of Labour MPs abstaining from the vote, with ministers saying “tough decisions” were needed to fix the public finances.

But it was widely criticised by opposition MPs and campaigners, who warned the move would leave millions of pensioners worrying over how to make ends meet.

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Speaking to Sky News’ Politics Hub show with Sophy Ridge, Vorderman said Labour’s decision to pursue the cut was “astonishing”.

Asked by Sophy what Sir Keir Starmer should now do, she said: “I think he should apologise. I absolutely do.”

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The broadcaster, famed for her stint on Channel 4 gameshow Countdown, has become more vocal about her politics in recent years, and in the run-up to July’s general election gave her backing to a tactical voting website designed to “stop the Tories”.

She said: “I was following intently the build-up to the election and we had just under two million postcodes typed in [to the website]… we know it had an influence.

“And millions of people loaned their vote to Labour in the belief that finally this gross inequality that has grown over the last 14 years would be diminished somewhat.

“And then this [cutting the winter fuel allowance] is the first thing.”

Vorderman said she understood why ministers would want to take the payment – worth up to £300 – from wealthy pensioners who got the money regardless of their income.

“I’ll be one of those in two years time”, she added. ” So I wouldn’t need the winter fuel allowance payment.

“But to go from 12 million to less than two million pensioners receiving it is just way too low.

“And I’m shocked by it, because they could raise that money in so many other ways.”

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Asked by Sophy if she believed the government had “duped” the public ahead of them getting into power, she said: “I do, I really do. And I am shocked because, even extracting the fact that many pensioners will be suffering because of it… it is unbelievable that this new Labour government the first thing they do is that?

“It is not, I don’t believe, what they were voted in to do, it is quite astonishing really.”

When this was put to Chief Secretary to the Treasury Darren Jones, he told Sophy: “We had a mandate [at the election] to get a grip of the public finances, and what we didn’t know in opposition – what the public didn’t know – was that the Conservatives had hidden the facts that there was £22bn of bills coming this year they’d put no money aside for.

“That’s the running of our health service, our GP services, our schools, our police. It is our responsibility, because we are trusted on the economy, with people’s money, to be able to find the money to pay those bills, to keep our public services running to order.

“That’s about resetting the budget so that at the Labour Budget on 30 October, we can start to invest in fixing the foundations and then start to deliver on our manifesto to rebuild Britain.”

The full interview will air on Sky News’ Politics Hub with Sophy Ridge tonight at 7pm.