What's happened
Economists have forecast July GDP to be flat with June, after growth in June. July’s annual output is 1.6% higher than a year earlier, the fastest since February 2025, with services strength offsetting declines in production and construction. The Bank of England sees growth this year near 1.1% as inflation remains a focus.
What's behind the headline?
Context and implications
- The July reading is expected to show flat GDP, maintaining momentum from June’s 0.4% rise. If confirmed, the data would reinforce a narrative of a resilient UK services sector even as manufacturing and construction weigh on overall output.
- The BoE’s forecast for 2026 sits around 1.1%, with inflation seen edging higher later in the year, driven in part by energy prices and global demand dynamics.
- The data may limit near-term policy shifts, as policymakers weigh growth against inflation pressures and external risks such as energy costs.
What this suggests for readers
- Households may face steady economic conditions with pockets of strength in services but softer activity elsewhere.
- Businesses in services could see continued demand, while exporters face the usual currency and energy cost challenges.
Forward look
- If July remains flat, markets will scrutinize August and September data for signs of re-acceleration or a cooling trend, with the BoE likely to factor in any momentum changes in its upcoming briefing.
How we got here
Analysts expect July GDP to show no month-on-month growth after a 0.4% rise in June. The picture follows a Q2 expansion of 0.4% and a strong annual pace earlier in 2026. Oil-price movements and AI-driven software activity are among factors influencing the outlook.
Our analysis
Reuters reports on July GDP and BoE projections, Independent sources discuss potential July decline and Q3 risks. Quotes from Liz McKeown and analysts highlight services strength and energy cost effects.
Go deeper
- What does this mean for households’ spending this quarter?
- How might energy prices influence the BoE’s next moves?
- When will August data reveal a clearer trend?
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