UK economy unexpectedly stagnated for a second month in July

Gross domestic product was unchanged after flatlining in June, the Office for National Statistics said Wednesday. Economists were forecasting a 0.2% increase. Declines in production and construction were offset by services and a rebound in retail sales.

The British economy outpaced all of its Group of Seven peers in the first half with an expansion of 1.3%. Its performance in the second half is expected to be significantly weaker, however, with the Bank of England and private-sector economists forecasting growth of 0.3% on average in the third and fourth quarters.

Labour, which swept to victory in the July general election, is counting on growth to repair the public finances and deliver the boost to living standards promised to voters. Prime Minister Keir Starmer has pledged the fastest sustained growth in the G-7 by reforming the planning system and lifting investment, a lofty commitment after more than a decade of feeble productivity gains.