The UK economy “continued to slow” and recorded zero growth in July, according to official figures showing a big drag from manufacturers.

The data from the Office for National Statistics (ONS) followed a figure of 0.4% growth the previous month and negative growth of 0.1% in May.

Output of 0.3% was achieved over the April-June quarter as a whole, slowing from the 0.7% recorded over the first three months of 2025.

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The latest figures signal concern for the months ahead as the labour market slows and the effects of elevated inflation and the US trade war dampen demand.

Commenting on July’s activity, ONS director of economic statistics Liz McKeown said that declines in production offset meagre growth in services and construction.

“Growth in the economy as a whole continued to slow over the last three months”, she said.

“While services growth held up, production fell back further.

“Within services, health, computer programming and office support services all performed well, while the falls in production were driven by broad based weakness across manufacturing industries.”

The Labour government made growing the economy its priority when taking office last summer but the chancellor admitted this week that it had become “stuck”.

The US trade war has proved a drag on activity globally this year but Rachel Reeves has also been accused of applying the brakes herself by plundering the private sector for cash since taking office, harming investment and employment in the process.

Employers reacted to a £40bn budget tax raid by cutting jobs and passing on rising costs to customers.

Inflation is currently running at almost double the Bank of England‘s 2% target, harming the prospects for future interest rate cuts.

Bank data out last week suggested employers were cutting jobs at the fastest pace since 2021.

Attention is turning swiftly to the next budget, due on 26 November, and nerves over what measures are to come are hampering sentiment.

Ms Reeves is under pressure to raise more taxes to fill a black hole in the public finances estimated to be between £30-£40bn.

The chancellor has again ruled out raising income tax, employee national insurance contributions and VAT, which, she has always stated, would cause direct harm to “working people”.

Possible targets include the wealthy. Banks also fear a raid on their profits.

But the chief executive of the CBI business lobby group told The Guardian newspaper earlier this week that Ms Reeves should now break her promise not to target workers.

Rain Newton-Smith argued that new tax rises on businesses would amount to a further choke on growth and employment, harming working people indirectly in the process.

The CBI wants to see reforms to business rates and cuts to VAT thresholds, among other things, as the private sector shoulders its larger tax burden.

“The world is different from when Labour drafted its manifesto, and when the facts change so should the solutions,” Ms Newton-Smith added.

The chancellor has responded with plans to ease some barriers to business as part of efforts to improve growth.

The Treasury is considering an overhaul of small business rates relief rules to end a so-called “cliff edge” penalty facing firms opening a second premises.

The British Retail Consortium warned separately on Friday that 400 of the country’s largest stores could close if such premises fall into a proposed higher business rates band.

It argued that they were already under significant pressure from soaring employment and tax costs, which had accounted for the closure of 1,000 such spaces over the past five years.

Commenting on the ONS data, a spokesperson for the Treasury said: “We know there’s more to do to boost growth, because, whilst our economy isn’t broken, it does feel stuck.

“That’s the result of years of underinvestment, which we’re determined to reverse through our Plan for Change.

“We’re making progress: growth this year was the fastest in the G7; since the election, interest rates have been cut five times, and real wages have risen faster than they did under the last government.

“There’s more to do to build an economy that works for, and rewards, working people. That’s why we are cutting unnecessary red tape, transforming the planning system to get Britain building, and investing billions of pounds into affordable homes, Sizewell C, and local transport across the country.”

Shadow chancellor Mel Stride responded: “While the government lurch from one scandal to another, borrowing costs recently hit a 27-year high – a damning vote of no confidence in Labour that makes painful tax rises all but certain.

“It is little wonder that Starmer has stripped Reeves of control over the budget. But sidelining her is not enough – he must also reject her failed economic approach that has left Britain poorer.”

An influential committee of MPs is seeking COVID-19-style financial support for Jaguar Land Rover as it tries to recover from a cyberattack.

After a week of plant closures, the Committee for Business and Trade has written to the chancellor, asking her what is being offered to the carmaker “to mitigate the risk of significant, long-term commercial damage to affected firms”.

The 34,000 UK workers of Jaguar Land Rover (JLR) are to remain at home until at least next week after a cyberattack discovered last week halted operations.

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Staff are still being paid from JLR sites in Halewood, Merseyside, and Solihull and Wolverhampton in the West Midlands, but the entire economy around the West Midlands is affected.

JLR suppliers Evtec, WHS Plastics, SurTec and OPmobility have had to temporarily lay off roughly 6,000 staff.

Operations could be disrupted for “most of September” or worse, according to a report from The Sunday Times.

On Thursday, Business and Trade Committee chair Liam Byrne wrote to Chancellor Rachel Reeves, saying: “Firms across the supply chain are now warning the committee of disruption to both upstream and downstream businesses.

“This disruption, we are told, may imminently pose very significant risks to cashflow.”

Intervention, akin to the emergency steps taken to secure British Steel production, is suggested by Mr Byrne to “protect sovereign areas of strength in the UK’s industrial, scientific and technological base”.

A group of English-speaking hackers claimed responsibility for the JLR attack via a Telegram platform called Scattered Lapsus$ Hunters, an amalgamation of the names of hacking groups Scattered Spider, Lapsus$ and ShinyHunters.

Scattered Spider, a loose group of relatively young hackers, were behind the Co-Op, Harrods and M&S attacks.

Four people were arrested for their suspected involvement in the April attacks and have been bailed.

The Marks & Spencer (M&S) executive responsible for its technology function is leaving the retailer months after a devastating cyber attack which disrupted its systems at a cost of hundreds of millions of pounds.

Sky News has learnt that Rachel Higham, M&S‘s chief digital and technology officer, is leaving the company.

A former WPP and BT Group executive, Ms Higham was hired by M&S early last year.

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Her departure was announced in an internal memo circulated on Thursday.

In it, the company said she was “stepping back from her role”.

“Rachel has been a steady hand and calm head at an extraordinary time for the business, and we wish her well for the future”.

The April cyber attack on M&S, which was conducted by a group called Scattered Spider, brought its online operations to a halt, underlining the growing threat posed by such incidents.

Its click-and-collect service is now back up and running, and the retailer expects part of its costs to be covered by insurance.

M&S said early last month that it was not looking to replace Ms Higham following an enquiry from Sky News.

It was unclear who would succeed her in the role or whether she would be eligible for a payoff.

An M&S spokeswoman confirmed on Thursday that the memo was genuine but refused to comment further.