UK economy stagnates again as Port Talbot faces job cuts

The UK economy has shown no growth for the second consecutive month in July 2024, despite a 0.5% increase in GDP over the three months leading up to July. This stagnation has surprised economists who had anticipated a modest growth of 0.2% for July. The disappointing economic performance is compounded by the impending job cuts at Port Talbot steelworks, where 2,500 positions are expected to be eliminated as part of a £500 million rescue deal from the UK government. The services sector, which is closely monitored by the Monetary Policy Committee, experienced a rebound in growth, particularly in computer programming and health services, following disruptions from strike actions in June. This recovery in services may not be sufficient to offset the overall stagnation in the economy, leading to concerns about future economic policies and potential interest rate cuts. Economists are now speculating about the likelihood of an interest rate cut, with a near-25% chance of a reduction next week, although many believe that November is a more probable timeframe for such a move. The disappointing GDP figures are expected to complicate the upcoming budget announcement on October 30, as the Chancellor faces a challenging economic landscape. Overall, the combination of stagnant growth, significant job losses in key industries, and the uncertain economic outlook raises questions about the UK's economic recovery and the effectiveness of government interventions in stabilizing the economy.